Fiberglass Reinforcing Business Plan
1. SUMMARY OF THE PROJECT
The goal of the project is the organization of an enterprise manufacturing fiberglass reinforcement. Location – pos. Reconstructor of the Rostov region. Sales are carried out directly to construction and installation organizations, as well as wholesale bases of building materials.
Production is located on leased premises, equipment is acquired. The production technology is transferred along with the equipment by its supplier. The project is notable for its high profitability and medium risk, which is associated primarily with the relative novelty of the product for the Russian market. In addition, the high profitability of the business is ensured by the simplicity of the manufacturing technology of this product.
2. COMPANY DESCRIPTION AND INDUSTRY
Armature is one of the most used materials in construction. It is used to reinforce concrete building parts and structures. Concrete structures reinforced with reinforcement are called reinforced concrete. Historically, steel reinforcement has been used for this, the production of which is quite material- and capital-intensive. Moreover, it has a number of weaknesses: corrosion resistance, high mass, etc. Fiberglass reinforcement is a modern alternative – it is much lighter, not subject to negative environmental influences, and the cost of its production is minimal.
The production, in order to reduce the cost of renting the premises, is located within 10 km from the city of Rostov-on-Don, in the village. Reconstructor. Sales region – Rostov region. Given the fact of stable growth in construction volumes, even in the face of difficult economic conditions, the sales market for valves is very wide. According to Rostovstat, in 2015, more than 575,000 m2 of housing was commissioned in the Rostov Region, which is 13% more than in 2014. 52% of this volume is in individual housing construction. Industrial construction and the construction of public buildings do not show such growth rates, but the volume of construction is stable.
Widespread today, the technology of frame-monolithic construction involves the use of reinforcement in large volumes. Thus, the main sales channel is the supply of material directly to construction sites by agreement with the construction and installation organization performing concrete work. In addition, about 10% of the total volume is planned to be sold through building materials databases, where private individuals can purchase them for individual construction.
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The level of competition in the segment is quite high. In addition, this type of product does not have pronounced consumer properties; there are analogues and substitutes on the market. The most commonly used traditional steel reinforcement, it accounts for at least 70% of the market. Nevertheless, due to the high-quality processing of the regional market, one can go beyond the remaining 30% attributable to fiberglass, thus expanding the boundaries of the market.
To achieve the targets for revenue, an enterprise must have partnerships with a number of construction organizations. At the moment, the owner of the enterprise has established relations with a number of design and construction organizations, which, according to preliminary estimates, can guarantee sales of up to 50% of the planned volume of production of valves. To ensure the required level of sales in the company’s staff, there are two sales representatives who are constantly processing the market, searching for objects and partners.
The project is not limited in time, but strategic planning is carried out for a five-year period. According to the owner’s main vision, according to the results of five years of work, the enterprise’s market share should be at least 10% of the volume of fiberglass reinforcement and at least 3% of the total regional market.
An appropriate legal form for this enterprise is an individual entrepreneur. Based on the results of comparing various options, a simplified taxation system with the object “income minus expenses” has been selected. The amount of required investment costs is 3.33 million rubles, a significant share of which is the acquisition of equipment and the formation of working capital until the return on payback. Also, an initial purchase of raw materials worth 1.5 million rubles is expected.