BUSINESS PLAN
Advanced Micro Devices
www.amdtech.pk
General introduction of company
AMD (Advanced Micro Devices) Technologies is a new company being launched this
year. The business plan of this company is formulated as below; the company has its own
Personal Portable Electronic devices: Laptops, USB’s and Mobile phones.
AMD Technologies is an exciting start-up company in the newly emerging field of
portable Electronic Devices; such as laptops, USB’s and mobile phones, respected
industry analysts such as Ovum, Dell and Acer predict this will become a $22
billion market within the next five years.
Business Model:
We are selling our products to end consumers (B2C).
Revenue Model:
We will generate revenue through sales.
Summary for starting up the company
Our plan begins with a two month start-up period during which we will focus primarily
on setting up our offices and developing our system designs, but also including
significant initial marketing work. Our start-up expenses for these first months will be
used for further product development, legal costs, payroll, marketing and typical
expenses associated with opening our first office. The founders will provide the first
round financing to launch the company, initiate a small production run of our Personal
Device(s), and initiate further product development, while marketing and pre-selling our
devices.
In addition, we will need another investor/partner to provide funds to cover the cash
necessary to see us through our first year in business, as we begin to make and sell our
products. We plan to fund future growth from sales revenues.
Initially, we will be leasing a relatively small office space for administrative functions
and an electronics bench lab in order to keep our first year expenses to a minimum, as we
continue product development while marketing and pre-selling our Personal Device(s)
prior to production. We will consider a larger office space only when we have outgrown
our current facility, dependent on sales, budgets and personnel needs.
We have identified the following equipment needed for opening our first office:
1. Engineering lab equipment.
2. Software and hardware development tools.
3. Office furniture for three (sales and administrative) workstations.
4. Dell Computer Systems - three desktop computers, two laptop computers, laser
printer, color printer, digital camera, scanner, GPS cell phones and a broadband
internet connection.
5. Telephone system and GPS cell phones.
6. Copier and fax machine.
7. Additional costs for assorted professional service providers' fees including
business, development, and legal and accounting providers.
8. Professional website development and maintenance.
9. Two leased company vehicles and associated costs.
Details of our start-up requirements can be found in the Start-up tables, below.
START-UP FUNDING
Start-up Expenses to Fund $100,700
Start-up Assets to Fund $349,300
Total Funding Required $450,000
START-UP
REQUIREMENTS
START-UP EXPENSES
Legal $30,000
Stationery etc. $1,500
Consultants $5,000
Insurance $1,000
Utilities $2,400
Rent $3,800
Research and Development $3,500
Expensed Equipment $10,000
Industrial Design $10,700
Personnel $30,000
Company Vehicles & Associated Expenses $2,800
Other $0
Total Start-up Expenses $100,700
START-UP ASSETS
Cash Required $349,300
Start-up Inventory $0
Other Current Assets $0
Long-term Assets $0
Total Assets $349,300
Total Requirements $450,000
Products and Services
AMD will develop and distribute miniaturized Personal Laptops, USB’s and mobile
phones. Initially, the manufacturing of our devices will be subcontracted, while we
develop the supporting software and systems internally, although we plan to manufacture
our products in-house in future years. Unlike our competitors, we have military-inspired
proprietary technology (patents applied for) which allows many of our systems to work
with or without the presence of cellular towers, enabling their use anywhere in the world,
including cities, deserts, oceans, lakes, mountains, or anywhere else adventurous travelers
find themselves. Our products are also distinct in that they are small and fully
programmable. Our systems can be customized by the end user for his or her unique,
individual applications.
Market
Our primary target markets include, but are not limited to, the family consumers, channel
sales to original equipment manufacturers (OEMs), businesses tracking shipments or
vehicles, the military, and the political arena. Because of our unique proprietary
programming capabilities for each individual unit, we have already received indications
of interest from several of these target markets, including one of the top ranked personals.
We predict our systems will also appeal strongly to families concerned about the safety of
their loved ones. Sadly, child abduction is on the rise globally. More than 2,100 children
are reported missing each day in an international country alone (FBI National Crime
Information Center). At the other end of the age spectrum, there are 4.5 million
Alzheimer patients in the Pakistan. 60% of whom (2.7 million adults) wander away from
their homes at some point, unaware of their surroundings. We believe our devices will
greatly reduce these figures in both cases, while potentially saving lives and connecting
people to their loved ones, sharing all the information and carrying the important
documentations in a soft copy format..
The combined number of "potential" customers for our products is well over
500,000,000; we will focus on a more realistic and attainable three-year sales goal
of roughly 99,000 users worldwide, which will generate many millions of dollars in sales
revenues.
Management
The founders of AMD Technologies, Mr.A and Mr.B, have been associates for over 20
years; they create the perfect synergy to ensure the success of our company. Mr.A is a
Sales and Marketing Management veteran with more than 25 years of successfully
penetrating previously unseen markets niches, partnering with other companies in win-
win scenarios, and creating national presence for companies. He is also, accomplished in
launching new products. Mr.B is a Chief Electronic Engineer with 20 years experience,
and is considered an expert in his field, having previously designed devices for military
applications, medical imaging systems, computers and more.
By focusing on our strengths, our key customers, and our customers' needs, AMD
Technologies will increase sales to several millions of dollars within two years, while
also improving the gross margin on sales, cash management and working capital.
Highlights of what we see of our company in the near future.
Mission
AMD Technologies' mission is to become the leading vendor of Personal Laptops. USB’s
and mobile phones worldwide. Through a combination of evolving technologies,
miniaturization, affordability for the end-user, programming capabilities and ease of use,
AMD Technologies will be known as the premier developer/supplier of potentially life-
saving Personal portable electronic devices.
Keys to Success
The keys to success in this business are:
1. Product quality and efficacy in real-life situations.
2. Utilizing next-generation technology in order to improve upon current systems,
while differentiating ourselves from our competition.
3. Marketing: either dealing with channel issues and/or barriers to entry, or solving
problems with major advertising and promotion budgets in order to penetrate our
target markets.
4. Management: products delivered on time, costs controlled, marketing budgets
managed. There is a temptation to increase growth at the expense of profits; we
will keep a close eye on this temptation in order to live up to our plan.
5. Sustaining controlled growth in order to manage start-up costs more efficiently.
To maintain these key factors, AMD Technologies' needs include start-up funding,
partnering with value-added investor/partners, aggressive marketing, quality sales
professionals, accomplished C-Level management, product branding, increasing reach
into target markets, affiliating with the right channel partners, competitive intelligence
and appropriate use of evolving technologies.
Objectives
AMD Technologies has identified three types of objectives that will serve as challenging
but attainable goals for the organization. They are:
Business Objectives
1. To become the premier vendor in the new and evolving personal portable
electronic devices (USB, mobile phones and laptops)
2. To reach profitability within one year of the company's launched.
3. To develop additional profit centers such as programming, training, seminars,
ancillary equipment, etc. within the first two years.
Financial Objectives
1. Increase product sales to several million dollars annually by the end of the second
year.
2. Bring gross margin up and maintain that high level by the third year.
3. Improve inventory turnover on an ongoing basis, until "just-in-time" inventory is
standard by the third year.
Marketing Objectives
1. Focus on target marketing to increase market penetration and domination.
2. Expand target markets with controlled growth.
3. Establish brand awareness for the AMD Technologies' name and products.
4. Position ourselves as the leading company in the world.
Company Ownership
AMD Technologies is owned and operated by its founders, Mr.A and Mr.B. We are
currently in search of an investor/partner(s) who will bring more to AMD
Technologies than just financing. The ideal Investor/Partner(s) we are seeking should
bring expertise in the areas of legal, financial, and international regulatory issues, as
a portion of our target market(s) will be international in scope in the near future. The
Investor/Partner(s) will receive an equity position in the company and sit on the Board of
Directors.
Services
As AMD Technologies grows, we will be defining and developing additional profit
centers for our company and investors by offering value-added services such as training
classes, seminars, on-site programming, private labeling for our channel market resellers,
and other ancillary revenue streams based on individual client needs.
Market Analysis Summary
There is a market potential for more than a billion users worldwide, we are estimating a
more realistic long-term market for Personal GPS/GSM technology, initially marketed
within the United States.
Our Market Analysis focuses on five key potential customer groups:
1. Family Consumers
2. Original Equipment Manufacturers (OEMs)
3. Businesses
4. The Military
5. Political and other Government Consumers
Family Consumers: this low-cost device will help families concerned about the
whereabouts of their children, teens, elderly parents and pets, by enabling them to keep
tabs on their loved ones' locations at any given time. One of the many programming
capabilities of this device will allow the family to set distance parameter guidelines,
Channel Sales to Original Equipment Manufacturers (OEMs): As the heavily
saturated markets of cellular phone carriers and computer manufacturers grow more
competitive each year, both segments are continuously looking to add new technologies
and systems to draw consumers to their specific and sometimes proprietary products and
services. The AMD Technologies devices are designed to be used with a "home base"
unit, (a PDA, most cell phones or computer), and we see great potential to partner with
cellular providers, cell phone manufacturers, computer manufacturers and resellers.
Businesses: Our product enables a business location to keep real-time interaction of
company vehicles, valuable packages, outside employees, deliveries, etc. We believe our
device will be viewed by businesses as an economical way to increase productivity,
giving them real-time data on the communications of their field employees and vehicles
at all times, and helping to better manage fleet and deliveries logistics. One of our key
strengths in this market segment is the low one-time cost, rather than a recurring fee for
usage, adding to the business's ROI for our products.
Competition and Buying Patterns
In the Personal electronic devices, consumers are searching for the most effective product
at the lowest possible price; different market segments will put different emphases on
ease of use versus reliability or cost, depending on their needs and budgets. Although we
will emphasize some aspects of our products differently for the distinct market segments
described above, our products beat the competition on all grounds.
Strategy and Implementation Summary
Differentiate ourselves from our competitors.
This will be easy, as our USB’s product have more capabilities, is easier to use, is more
concealable and will work with most cellular providers. We need to establish our
products as cost efficient, viable solutions for our target markets.
Build a relationship-oriented business. For clients such as our channel market resellers,
and institutional consumers like the military, relationships will be important. We will
become a revenue-generating partner for them, not just a vendor, making these market
segments increasingly receptive to our offerings. We must effectively convey the
potential monetary value of the relationship, as well as the intrinsic value in being able to
offer life-saving, user-friendly devices to their end-users and members.
Focus on target markets.
We need to focus our sales and marketing efforts strategically in order to succeed in our
target markets. As a start-up company, we believe the consumer market and channel sales
will give us the quickest launch and penetration while immediately generating revenues
to sustain our company's growth and expansion into other markets. The business market
will likely be the next key, as we promote our products as tools for businesses to manage
outside personnel and fleet costs and logistics.
Fulfill the promise.
We can't just market and sell our products, service and support; we must actually deliver
as well. We need to make sure we have the technological knowledge we claim to have,
while keeping up with evolving technologies to advance the capabilities of our newest
products and services.
Competitive Edge
Our competitive edge lies with our innovative products, as well as the successful
planning and implementation of our marketing plans.
AMD Technologies' unique application of a remote miniaturized mobile phone units that
incorporates an end-user programmable transmitter/receiver inside a unit only 2" x 2" x
3/8" that has GPS/GSM technology is relatively new to the marketplace. It is this new
technology which will make our Personal Device(s) attractive to resellers such as our
channel market segment. While not widely known, most of the major cellular phone
manufacturers will be incorporating GPS technology into their newly manufactured cell
phones over the next three years. We believe this is a key advantage for us, as our remote
unit has been designed to work with these next-generation cell phones. We are a couple
of years ahead of our competition in the sense that our remote unit will immediately work
with these "new technology" cell phones.
Another competitive edge is our positioning as a strategic ally with original equipment
manufacturers of PDAs and laptops, who are clients more than customers. By building a
business based on long-standing relationships, we build defenses against competition
through the demonstrated efficacy of our products, and our partners' loyalties. For our
channel sales partners, our products translate into new customers and additional recurring
revenues. The longer the relationship stands, the more our clients will understand what
we offer them and why they need it, further solidifying our intended relationships with
major cell phone carriers and computer manufacturers.
Competitors' Disadvantages
While AMD Technologies competes against other companies and technologies meant to
provide similar products and services, they cannot match ours. Our competitors have
several disadvantages:
Effectiveness:
1. Most competitors do not offer remote miniaturized concealable units which users
can wear; their devices would be especially bulky, awkward, and obvious on
children.
2. Their products do not allow for a locating "home-base" which is a cell phone,
Palm Pilot or wireless mobile computer or desktop anywhere in the world, which
can report on the unit's location instantly, even while both units (remote and base
units) are in transit.
3. Our competitors' devices cannot be programmed for individual remote unit
applications, such as water activation, parameter limit alert, medical history of the
wearer, etc.
4. The units cannot be armed from a remote location.
Price:
1. Greater initial cost to the end user ($200-$2000), with fewer features and
capabilities.
2. Recurring monthly fees to the end user with most systems.
The most significant difference between our system and our competitors' is our use of
"unassisted" GPS/GSM technology. Unlike our competitors', our system is not reliant on
being in an area where cellular towers exist. Our competitors' products do not work in
areas where there is no cellular coverage, or less than the three cellular towers needed for
triangulation. Our system uses military inspired radio frequencies which transmit directly
to the GPS satellite network. Our system will work anywhere in the world, including
deserts, mountains, oceans and all other remote locations.
Marketing Strategy
Our most important marketing goal as a start-up is to build product and brand awareness.
The way we go about this task will vary from one market segment to another.
Family Consumers
While it is widely know that child abductions are on the rise every year, and that
Alzheimer's disease afflicts more seniors annually, it is not well known that products
such as the AMD Technologies' Personal Device(s) are available at such an affordable
cost. We are anticipating the end-user's cost at less than 33 cents per day for one year,
based on a price point of only $120.00 per unit to the end user.
To raise awareness of our products among Family Consumers, our main marketing
strategy hinges upon a high-publicity, one-time "stunt," to take place in late October or
early November of 2012.
Channel Market to OEMs
We will focus our efforts to partner with Original Equipment Manufacturers on
nationwide cellular providers and computer manufacturers. We will emphasize our
products' potential as an additional source of revenue for them, both at the front end for
product sales, and in the case of cellular providers, with recurring monthly revenues; this
should make our product very desirable as part of their product lines. By solidifying these
partnership agreements, we will also enable cross-marketing back into the consumer
market through their sales forces' efforts and their advertising, increasing our sales efforts
nationwide without the expense of additional personnel to cover the entire U.S. We
believe that once partnered with these companies, our channel market partners (resellers)
will advertise the AMD Technologies Personal Device(s) as new features in their
traditional outlets, primarily print advertising and in-house POS material, in order to
increase mutual sales and brand awareness, benefiting both organizations, while fitting a
nation of families with our potentially life-saving device.
Business Market
We will be marketing to businesses through traditional sales efforts, such as advertising
in trade publications and establishing a presence at select trade shows geared towards
businesses in our market segment. For the larger companies we target, we will offer the
free use of a limited number of our products for a limited time, to prove their efficacy in
controlling costs of outside fleets and personnel, in order to penetrate and gain market
share in this segment. We believe once senior management of these businesses feel more
in control of the whereabouts of their outside concerns (personnel and vehicles,
deliveries, packages, equipment, etc.) they will understand that they can, in essence,
manage their outside logistics from the comfort of their office more efficiently than
through traditional methods.
Sales Strategy
We need to convince consumers of the serious benefits of AMD Technologies'
Personal Portable Electronic Devices. Except for vehicle, equipment or package
communications, we sell a "life-saving communication/ interactive-rescue product," not
an electronics system that relays GPS/GSM location data. Once our device has been
proven effective in a real-life situation, we firmly believe that multiple media sources will
want to run our product's life-saving results as a human interest story. Any press, print or
broadcast third party endorsements will be included in future sales and marketing
literature. We are planning to stage a mock-abduction, with the media present in order to
document and feature the efficacy of our product on their respective television programs
or in their print media.
We have to sell our service and support. The AMD Technologies' Personal Portable
Electronic Device(s) remote unit, while very easy to program and facilitate, will be better
received if we offer (fee based) training services for our larger clients, such as our
channel sales partners and large corporate accounts. Simplifying the understanding and
implementation of our system will help encourage the daily use and sales efforts of our
product, while generating additional revenues for AMD Technologies, our channel
market resellers while increasing the ROI for our investor/partner(s).
Sales Forecast
The important elements of the sales forecast are shown in the table below. We are using
aggressive forecasts that will achieve momentum, revenues, positive cash flow and
profitability. We feel these are attainable goals, as we plan to offer our Personal Portable
Electronic Device(s) in minimums of 1000 unit orders to our channel, military and
political markets. Units will be sold to our individual and family consumer market either
through our channel markets, or directly for a slightly higher fee through our website.
SALES FORECAST
YEAR 1 YEAR 2 YEAR 3
SALES
Family Consumers $540,000 $800,000 $1,250,000
Channel Sales to OEMs $605,000 $1,500,000 $2,225,000
Businesses $206,500 $300,000 $750,000
Military $150,000 $1,000,000 $1,125,000
Political $450,000 $472,500 $496,125
Total Sales $1,951,500 $4,072,500 $5,846,125
DIRECT COST OF SALES YEAR 1 YEAR 2 YEAR 3
Chipset $683,025 $1,425,375 $2,046,144
Programming $0 $0 $0
Packaging $292,725 $570,150 $701,535
Subtotal Direct Cost of Sales $975,750 $1,995,525 $2,747,679
Development Requirements
The AMD Technologies' initial website will be developed with few technical resources; a
simple hosting provider will host the site and provide the technical back end.
The design, updates and maintenance of the site will be done by contracted web
designers, for a more professional image of our company, freeing up senior management
to focus on company growth and product development. As the website rolls out future
developments such as new products, product add-ons and software updates ancillary
products, newsletters and downloadable market research reports. We may need to
contract further technical resources to build the traceable download information with the
capabilities of transmitting and organizing extensive information.
Management Summary
AMD Technologies' management will be slow to hire new people, and very loyal to those
who are hired. We believe our employees will be our greatest asset, and therefore, as we
increase personnel, we will be looking only for individuals whose experience,
skills, contacts and expertise will help foster the development and growth of our
company. While there is a temptation to hire inexpensive personnel in order to further
control costs, our philosophy is that there is a better rate of return in hiring more
experienced personnel with expertise in areas we need, so they can immediately
contribute to helping attain or exceed the company's goals and objectives.
Initially, AMD Technologies' day-to-day operations will be managed by its founders,
who prefer a close, hands-on approach to all aspects of their business. As the company
grows, we will be adding accomplished Executive Management at the C-Level in order to
manage our growth with expertise in the areas most needed. AMD Technologies is a
small company with a minimum command hierarchy and a maximum of community
spirit and cooperation. Once profitable, we intend on donating a small percentage of
proceeds to charitable causes that are within our target market(s), both as a measure of
good will and as an added marketing leg. Despite the small size of this company, our
business practices are centered on implementing our goals, never losing sight of
profitability objectives and ROI for our investor/partner(s).
In order to minimize our start-up costs, we will continue to outsource the manufacturing,
industrial design and packaging of our devices until the product demand warrants a more
profitable method of producing the quantities needed to fulfill sales orders. Only at that
point will we consider manufacturing the products ourselves.
Management Team
Mr.A/CEO
Mr.A is a 25 year veteran in Sales and Marketing Management, who has worked for such
companies as MobileComm , Telecast Productions and HiTec Group, International. His
strengths include the ability to understand a wide range of business profiles, practices and
markets. His accomplishments demonstrate superior strengths and skills in the
developing and managing successful sales forces, as well as locating and developing
untapped market niches in numerous and diverse industries. He is experienced in
partnering with recognized industry-leading companies to add scope, strength and brand
awareness to both partner companies in win-win situations. He is also experienced in
company start-ups, turnaround situations, new product launches and developing a
national presence for companies.
Mr.B/CTO
Mr.B has owned and acted as Chief Electronics Engineer of Embedded Systems
Electronics, Inc. (ESE) since 1994 and is an active member of the Institute of Electrical
and Electronics Engineering. He has been contracted by major electronic companies to
initially design or improve products such as communication devices, imaging systems,
digital camera circuitry, computers, video imaging systems, medical equipment. In his
field, he is considered an expert in hardware, software, and electronic engineering. He
holds a Bachelors of Electronics Engineering from the Ohio Institute of Technology, and
an MBA from the Keller Graduate School of Management.
Personnel Plan
Immediate personnel plans call for a minimum of three, to a maximum of five employees
for the first year, unless unforeseen sales growth dictates the absolute need for additional
personnel. After the first year, we anticipate the need for additional personnel in the areas
of office management and human resources, experienced technical sales professionals,
and financial and technical operations. We may hire these addition personnel on a part-
time basis, and move into full time positions as warranted by the company's growth.
Financial Plan
As a start-up company in an emerging and changing industry, we have intentionally
designed a conservative plan, looking to ensure the achievement of our corporate goals
to our investor/partner(s). We will of course revise our financial plan throughout the first
year based on actual figures in sales, manufacturing costs, technological advances,
personnel, office space, marketing costs, and so on.
Securing the patents (applied for) for our advanced devices and systems in a new and
emerging industry will add immediate value to AMD.
Our plan's success is also predicated on the following assumptions:
1. Securing seed money with investor(s)/partner who will bring added value to
AMD.
2. The acceptance of our device(s)/systems by the public, the business sector and the
military.
3. The ability to attract strong C-Level management to our team as needed.
4. Managing growth and production costs so as to maintain projected margins and
cash flow.
5. Staying ahead of technological advances in this field, and reacting to these
changes in a timely and efficient manner.
6. Managing the start-up of AMD with minimal personnel until steady growth
necessitates hiring additional department management and support staff.
7. Partnering with strong OEMs quickly in order to penetrate and dominate market
share.
8. Partnering with industry leaders (such as UPS, the U.S. Navy, etc.,) to assist in
demonstrating the efficacy of our systems.
9. Success in marketing our products for brand awareness and positioning.
10. Adjusting and adapting to the market trends within this new and emerging
industry.
Break-even Analysis
For our break-even analysis, we assume per month running costs which include our full
payroll, rent, utilities, and an estimation of other running costs. Payroll alone, at our
present run rate, is only about $18,000 per month. Margins are harder to estimate. Our
overall average price point of $120 per unit is based on a cost of $60 (+ or - 2%), or a
minimum gross profit margin of approximately 50%. We hope to attain a margin that
high in the future as our cost per unit decreases, as manufactured volume increases, while
focusing on a 20%-30% net profit.
The chart shows what we need to sell per month according to these assumptions in order
to break even. This is about 80% of our planned average 2004 - 2005 monthly sales
goals, even with four months of no revenue before sales begin; therefore we believe we
can realistically achieve these goals and maintain these levels.
BREAK-EVEN ANALYSIS
Monthly Revenue Break-even $156,331
ASSUMPTIONS:
Average Percent Variable Cost 50%
Estimated Monthly Fixed Cost $78,165
Important Assumptions
The financial plan depends on important assumptions, most of which are shown in the
following table. The key underlying assumptions are:
1. A slow start as we educate potential customers about this new technology.
2. In contrast, we assume steady growth once the efficacy of our product and
services are demonstrated.
3. That there are no unforeseen changes in technology which could make products
immediately obsolete, while newer technologies and in-house innovations will
only advance the scope of our product line and target markets.
4. Access to equity capital and financing sufficient to maintain our financial plan as
shown in the tables.
5. Ability to self-fund further growth after Start-up financing is secured.
6. Maintaining or improving profit margins based on lower costs per unit for higher
quantity production runs.
Projected Profit and Loss
The Profit and Loss table, below, shows our projected sales, cost of sales, and operating
expenses for the first three years. of particular note are the high Sales and Marketing
expenses; our research indicates these approximate spending levels will be necessary for
launching such a new and unique product successfully. We are currently taking bids from
four prominent advertising agencies to manage this aspect of our product launches.
We anticipate that sales will begin to generate a stable profit for in February of 2013,
about halfway through our first year.
Projected Cash Flow
The Cash Flow table below shows that while initial cash flow will be out of the business,
sufficient start-up funding, combined with projected sales revenues, should allow us to
maintain a high positive cash balance throughout our first year, as we launch our
products..
