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7/13/2018

BAGWORKS RENT A BAG

Mail: amey.patale@gmail.com
Business Plan | Director, Amey
Table of Contents
Executive Summary....................................................................................................................................... 2
Vision, Mission, Values & Goals .................................................................................................................... 2
Business Description ..................................................................................................................................... 2
Product Description ...................................................................................................................................... 3
Market Place analysis.................................................................................................................................... 3
Operation Plan .............................................................................................................................................. 4
Marketing Plan .............................................................................................................................................. 5
Financial Plan ................................................................................................................................................ 5
Management Plan ....................................................................................................................................... 10
Risk Analysis ................................................................................................................................................ 10
Business Exit options................................................................................................................................... 11
Executive Summary
Today’s generation is inclined towards sharing things instead of owning things. This coupled with Space
crunch in Metros calls for an innovation in the concept of travel bags. This is where renting of bag provides
an alternative. This concept is very much suitable for one time travelers, places with space crunch and
millennials. The market for this business is still very nascent and there is huge scope for growth as the
competitors are largely inactive. Our team comprises of cross- functional resources and we aim to achieve
the highest market share in 1 Year. Given our sound practices w.r.t. debt, there are no constraints on the
availing loans for capacity expansion.

Vision, Mission, Values & Goals


Vision
Be the world leader in the travel gear renting industry.
Mission
Empower every individual with an opportunity of a fulfilling travel experience
Values
Safety, Enjoyment, Sharing
Goals:
 Catch up with the world when it comes to sophisticated travel gear
 To develop our service and product offerings that match with target market needs
 To achieve 80% market share in the renting travel gear space
 To diversify in related business to be able to develop new markets and penetrating the existing
ones
 Build strong partnerships with the top online travel companies like MMT etc.

Business Description
BAGWORKS group marked its presence this year. The first service on offer is Rent-A-Bag. This is a private
family-owned venture. Key personnel include Mr. XYZ, who completed his MBA in Operations from NITIE,
Mumbai and has 20 years of experience in supply chain with a leading multinational organization. This
profound experience along with an able and young team, presents a good chance to succeed in this
venture.

The goal of this venture is to support this sharing mentality of millennials. We plan to expand our
operations all over India in the next 5 years, which would also facilitate on way. Our immediate goal is to
make this service acceptable and lucrative, which they won’t be able to reject.

Initially we will be based out of the 4 metro cities Mumbai, Delhi, Bangalore, and Kolkata. Our customer
base would be essentially millennials and non-frequent travelers. The relationship of BAGWORKS with the
brand Wild craft & Baggit, would help in procuring items at a greater discount. A relatively young
populations and the changing mindset are the major growth drivers. The venture is projected to grow at
20%, given the vastly underpenetrated market with inactive competitors.
Product Description
This is one of the most attractive service for space crunched metro users. This immediately attracts the
millennial generation due to their inherent attachment to a sharing philosophy. The presence in all metros
coupled with a well-established distribution system, enables user to rent bags even for a single way
journey. The insurance benefit with all the products enables to reduce any sort of contingency during the
travel. The free delivery/ pickup of bags, when required ensures the availability of bag in all cases. The
rent charged on a per day basis at very affordable rates.

Market Place analysis

• Non-frequent travellers are forced to purchase bags just for that


one visit
• Lack of space in cities like Mumbai

No. of companies- Mumbai – 2, India – 6

Biggest player – BragPack in an un-penetrated market

Nature of costs: Fixed cost -Bag cost, Variable cost - Maintenance

• Millennials who have different travel needs


• Targeting the urban marketspace i.e. first Mumbai then
move to 4 major cities
• Target is to reach every major city in the country
• Market size in Mumbai (est.) : 51000

• Warehouse
• Good inventory is needed of about at least 100 different bags in
the beginning covering all kinds of customer needs based on size,
utility and colour preferences
• A website & application for the product offering

• Idea of renting rather than buying to help customers reduce


their expenses
• Threat: No differentiation based on product, low barriers to
entry
• Value has to be added based on service offering
Operation Plan

 Location: Five year plan includes:

• Starting in Mumbai (Warehouses away from city, eg: Vasai, Virar)

• Expanding to New Delhi, Chennai and Bangalore in 3 years

• Expand to 4 new cities in the next 2 years

 Practical Details: Five year plan includes:

• Inventory

• Suppliers providing highest quality bags (starting off with a single supplier and
increasing to 5)

• Proper management of inventory to prevent stock out or excess stock as well as


tracking of inventory.

• Estimating the no. of bags based on the no. of bag days and number of travellers
in Mumbai (1st year) and other cities (next 3 and 2 years)

• Distribution

• Outsourced Logistics for delivery of bags and pickup (3 hours)

 Facilities: Five year plan includes:

• Setting up office buildings at location closest to labour force and suppliers (1-2 offices in
first year)

• Lease/buy more spaces for easier transportation (1-2 per location in 3 years)

• More land and buildings as expansion takes place to 4 new cities in the next 2 years

 Personnel: Five year plan includes:

• 1 person to manage inventory at warehouses

• Increase number of employees as locations expands.

• Proper hierarchical structure for management with a fixed appraisal process

 Customer Support: Five year plan includes:

• Support for requests either on call and internet orders

• Support for refunds and customer complaints

• To track orders as well as resolving queries

• A separate taskforce (24x7) to assist customers. Enhance and expand customer support
as business expands to more cities
 Website: Five year plan includes:

• Support for all requests/ orders.

• A separate task force to maintain the website and troubleshoot it as and when need
arises.

Marketing Plan
 Brand Strategy: To become a brand associated with frequent travellers and capture the
adventure and tourist traveller market

 Distribution Strategy: Tie up with hyper local partners for delivery (i.e.: Deliveroo – Sprint
Services, Road Runner, etc.)

 Product Strategy: Buy products from American Tourister, Samsonite etc. Also keep small
quantities of premium brands such as Louis Vuitton & Burberry. Additionally install tags in the
bag to enable ‘tracking’

 Pricing Strategy: Moderate pricing with loyalty program

 Promotion Strategy: Tie up with travel booking sites – ‘option to rent a bag’ along with the
travel insurance and other fringe options

Financial Plan
 Demand Estimation:

Population of India ( In Million) 1,324

Population of Mumbai ( In Million) 22

Percentage of Population
1.66%
of Mumbai w.r.t to India

Outbound Travelers ( In Million) 25

% of outbound travelers 36%

Total Travelers in India ( In Million) 69.44

Per capita income of Mumbai in Rs 190,615

Per capita income of India in Rs 86,000


 Revenue Estimation:
Presence in 1 Presence in 4 Presence in 8
city cities cities

Year 1 Year 2 Year 3 Year 4 Year 5

Total Travelers In Mumbai ( In Million) 1.15 1.29 5.79 6.48 29.05

Percentage of Per capita Income of Mumbai w.r.t


2.22 2.22 2.22 2.22 2.22
to India

Revised Total Travelers In Mumbai


2.56 2.86 12.83 14.37 64.39
(In Million)

Expected Proportion of users 2% 2% 2% 2% 2%

No of competitors 3 2 6 6 6

Expected Users (In Million) 0.017 0.029 0.043 0.048 0.215

Average Price per day 180 185 190 195 200

Average No of days per customer 2 2.5 3 4 5

Expected Revenue/ Year( In Million) 6.14 13.25 24.38 37.37 214.64


 Cash Flows:

RECEIPTS AND DISBURSEMENTS


FROM OPERATING ACTIVITIES Year 1 Year 2 Year 3 Year 4 Year 5

Revenues 6,138,215 13,248,313 24,382,625 37,369,581 214,635,544

- Advertising 1,000,000 500,000 2,000,000 1,500,000 4,000,000

- Sales Force Expense 150,000 160,000 640,000 660,000 990,000

- Warehouse Expense 300,000 330,000 1,320,000 1,452,000 2,640,000

- Repair & Maintenance Expenses 306,911 662,416 1,219,131 1,868,479 10,731,777

- Shipping 1,841,464 3,974,494 7,314,788 11,210,874 64,390,663

-3rd Party Revenue Sharing Expense 1,227,643 2,649,663 4,876,525 7,473,916 42,927,109

- Income Taxes 383276 908437 1619337 2615323 15546957

= Net Operating Cash Flow 928,921 4,063,303 5,392,844 10,588,989 73,409,038

INVESTING ACTIVITIES

Fixed Production Capacity 373,712 738,080 1,308,253 1,924,358 11,498,332

= Total Investing Activities 373,712 738,080 1,308,253 1,924,358 11,498,332

FINANCING ACTIVITIES

Increase in Common Stock 200,000 200,000 200,000 200,000 200,000

= Total Financing Activities 200,000 200,000 200,000 200,000 200,000

Cash Balance, End of Period 755,209 3,525,223 4,284,591 8,864,631 62,110,706


 Income Statement:

GROSS PROFIT Year 1 Year 2 Year 3 Year 4 Year 5

Revenues 6,138,215 13,248,313 24,382,625 37,369,581 214,635,544

- Cost of Goods Sold 373,712 738,080 1,308,253 1,924,358 11,498,332

= Gross Profit 5,764,503 12,510,233 23,074,372 35,445,223 203,137,212

EXPENSES

+ Advertising 373,712 738,080 1,308,253 1,924,358 11,498,332

+ Sales Force Expense 150,000 160,000 640,000 660,000 990,000

+ Shipping 1,841,464 3,974,494 7,314,788 11,210,874 64,390,663

+ Depreciation 331,669 691,834 1,238,328 1,846,306 10,411,504

= Total Expenses 2,696,845 5,564,408 10,501,369 15,641,538 87,290,499

Operating Profit 3,067,658 6,945,826 12,573,004 19,803,686 115,846,713

MISCELLANEOUS INCOME AND


EXPENSES

+ Other Income 0 0 0 0

- Other Expenses( Third party Revenue


Sharing + MRO) 0 0 0 0 0

= Earnings Before Interest and Taxes 3,067,658 6,945,826 12,573,004 19,803,686 115,846,713

- Interest Charges 175500 175500 175500 175500 175500

= Income Before Taxes 1,533,104 3,633,747 6,477,348 10,461,291 62,187,827

- Income Taxes 383276 908437 1619337 2615323 15546957

= Net Income 1,149,828 2,725,310 4,858,011 7,845,968 46,640,870


 Balance Sheet:

Year 1 Year 2 Year 3 Year 4 Year 5

CURRENT ASSETS

Cash 755,209 3,525,223 4,284,591 8,864,631 62,110,706

LONG TERM ASSETS

+ Net Fixed Assets 373,712 738,080 1,308,253 1,924,358 11,498,332

+ Warehouses 300,000 330,000 1,320,000 1,452,000 2,640,000

=Total 1,999,828 3,575,310 5,708,011 8,695,968 47,490,870

DEBT

Conventional Bank Loan 650,000 650,000 650,000 650,000 650,000

EQUITY

+ Common Stock 200,000 200,000 200,000 200,000 200,000

+ Retained Earnings 1,149,828 2,725,310 4,858,011 7,845,968 46,640,870

=Total 1,999,828 3,575,310 5,708,011 8,695,968 47,490,870


Management Plan
Director

Store Manager Website Manager Call Center Manager

Store Staff Website Team Call Center Team

Management Team Consists of,

Director  Amey Patale, PGDM (Finance) SIMSR, B.E. (Computer Engg) RGIT, Mumbai University has an
experience of 3 years in Automation Testing and an experience of 11 years in Credit Analysis. He is a
proven leader and an inspirational speaker.

Store Manager  Shivakant Shukla, PGDM (Operations) SIMSR, B.E. (IT Engg) VIT, Mumbai University
has an experience of 3 years in Development and an experience of 15 years in Supply Chain. He carries
with himself large amount of technical expertise and is a proficient manager.

Website Manager  Nick Shah, B.E. (Computer Engg) SP College, Mumbai University has an experience
of 6 years in website development. Nick possess the technical abilities and knows everything about the
website.

Call-Center Manager  Shreyash Mantri, PGDM (Marketing) SIMSR, B.Tech (Mechanical) NMIMS has an
experience of 4 years as a relationship manager. Shreyash possess excellent communication skills and is
known for handling several large clients.

Risk Analysis

Business risk

 Risk of non-payment of amounts


 Risk of damage of bag
 Risk of Supply chain issue
 Risk of IT failure
 Risk of bargaining power, due to asset light business model and not much awareness about the
business

Market Risk

 Risk of competitors in the same business


 Regulations from government
Consumer Risk

 Brand awareness
 Brand loyalty
 Risk of consumer distancing himself or herself from this kind of service

Business Exit options

As the director, I would like to be in business till perpetuity, however, in case of a situation that
demands an exit from the business, the following are the alternatives which would be exercised.

1. Sell to an AMC
2. IPO