202614965 Business Plan for Agency

Pre-Feasibility Study

(Security Agency)

Small and Medium Enterprises Development Authority

Ministry of Industries & Production

Government of Pakistan

www.smeda.org.pk

HEAD OFFICE

4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road, Lahore

Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7

[email protected]

REGIONAL OFFICE

REGIONAL OFFICE

REGIONAL OFFICE

REGIONAL OFFICE

Punjab

Sindh

Khyber Pakhtunkhwa

Balochistan

3rd Floor, Building No. 3,

5TH Floor, Bahria

Ground Floor

Bungalow No. 15-A

Aiwan-e-Iqbal Complex,

Complex II, M.T. Khan Road,

State Life Building

Chaman Housing Scheme

Egerton Road Lahore,

Karachi.

The Mall, Peshawar.

Airport Road, Quetta.

Tel: (042) 111-111-456

Tel: (021) 111-111-456

Tel: (091) 111-111-456

Tel: (081) 2831623, 2831702

Fax: (042) 36304926-7

Fax: (021) 35610572

Fax: (091) 5286908

Fax: (081) 2831922

[email protected]

[email protected]

[email protected]

[email protected]

Note: All SMEDA Services / information related to PM's Youth Business Loan are Free of Cost December, 2013

Pre-Feasibility StudySecurity Agency

Table of Contents

1.

DISCLAIMER ..........................................................................................................................................

2

2.

PURPOSE OF THE DOCUMENT .........................................................................................................

3

3.

INTRODUCTION TO SMEDA ..............................................................................................................

3

4.

INTRODUCTION TO SCHEME ...........................................................................................................

4

5.

EXECUTIVE SUMMARY ......................................................................................................................

4

6.

BRIEF DESCRIPTION OF PROJECT AND SERVICE .....................................................................

5

7.

CRITICAL FACTORS ............................................................................................................................

6

8.

OPERATIONAL CAPACITIES .............................................................................................................

6

9.

GEOGRAPHICAL POTENTIAL FOR INVESTMENT .....................................................................

6

10.

POTENTIAL TARGET MARKETS/CITIES .................................................................................

6

11.

SERVICE PROCESS FLOW ...........................................................................................................

7

12.

PROJECT COST SUMMARY .........................................................................................................

7

12.1

PROJECT ECONOMICS ................................................................................................................

7

12.2

PROJECT FINANCING ...................................................................................................................

8

12.3

PROJECT COST ...........................................................................................................................

8

12.4

SPACE REQUIREMENT .................................................................................................................

8

12.5

ARMS AND COMMUNICATIONS EQUIPMENT ................................................................................

9

12.6

FURNITURE AND FIXTURES .......................................................................................................

10

12.7

HUMAN RESOURCE REQUIREMENT ..........................................................................................

10

12.8

REVENUE GENERATION ............................................................................................................

11

12.9

OTHER COSTS ...........................................................................................................................

12

13. CONTACT DETAILS OF SUPPLIERS & CONSULTANTS .....................................................

14

14.

ANNEXURE .....................................................................................................................................

15

14.1

INCOME STATEMENT ..................................................................................................................

15

14.2

STATEMENT OF CASH FLOW .......................................................................................................

16

14.3

BALANCE SHEET ........................................................................................................................

17

14.4

USEFUL PROJECT MANAGEMENT TIPS .....................................................................................

18

14.5

USEFUL LINKS ...........................................................................................................................

20

15.

KEY ASSUMPTIONS .....................................................................................................................

21


1. DISCLAIMER

This information memorandum is to introduce the subject matter and provide a general idea and information on the said matter. Although, the material included in this document is based on data / information gathered from various reliable sources; however, it is based upon certain assumptions which may differ from case to case. The information has been provided on as is where is basis without any warranties or assertions as to the correctness or soundness thereof.

Although, due care and diligence has been taken to compile this document, the contained information may vary due any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA, its employees or agents do not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. The contained information does not preclude any further professional advice. The prospective user of this memorandum is encouraged to carry out additional diligence and gather any information which is necessary for making an informed decision including taking professional advice from a qualified consultant / technical expert before taking any decision to act upon the information.

For more information on services offered by SMEDA, please visit our website: www.smeda.org.pk

SMEDA Services / Information related to PMs Youth Business Loan are FREE OF COST -

2


2. PURPOSE OF THE DOCUMENT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment. The project pre-feasibility may form the basis of an important investment decision and in order to serve this objective, the document/study covers various aspects of project concept development, start-up, production, marketing, finance and business management.

The purpose of this document is to facilitate potential investors in setting up a

Security Agency by providing them with a general understanding of the business with the intention of supporting potential investors in crucial investment decisions.

The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, and certain industrial norms that become a guiding source regarding various aspects of business set-up and its successful management.

Apart from carefully studying the whole document, one must consider critical aspects provided later on, which form basis of any investment decision.

3. INTRODUCTION TO SMEDA

The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998 with an objective to provide fresh impetus to the economy through development of Small and Medium Enterprises (SMEs).

With a mission "to assist in employment generation and value addition to the national income, through development of the SME sector, by helping increase the number, scale and competitiveness of SMEs" , SMEDA has carried out sectoral research to identify policy, access to finance, business development services, strategic initiatives and institutional collaboration and networking initiatives.

Preparation and dissemination of prefeasibility studies in key areas of investment has been a hallmark of SME facilitation by SMEDA.

Concurrent to the prefeasibility studies, a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of experts and consultants and delivery of need based


3


capacity building programs of different types in addition to business guidance through help desk services.

4. INTRODUCTION TO SCHEME

Prime Ministers Youth Business Loan scheme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidised financing at 8% mark-up per annum for one hundred thousand

(100,000) beneficiaries, through designated financial institutions, initially by

National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL).

Small business loans up to Rs. 2 million with tenure up to 8 years, inclusive of 01 year grace period and a debt: equity of 90 : 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwah,

Balochistan, GilgitBaltistan, Azad Jammu & Kashmir and Federally Administered

Tribal Areas (FATA).

5. EXECUTIVE SUMMARY

Over the last two decades law and order situation of the country, particularly of the metropolitan cities like Karachi and Lahore, has become complex. Karachi, the economic hub of Pakistan, has been facing severe security problems. The growing sense of insecurity among households and businesses has created a demand for private security services. Currently, more than 800 private security companies / agencies are operating throughout the country. The demand for security services is still on the rise and the sector is currently growing at 5 - 6% per annum.

Location for a proposed Security Agency business largely depends on the type of security services it will provide to the client. The Security Agency is proposed to be established as a Private Limited Company or as a Single Member Company under the Companies Ordinance 1984. The office is proposed to be located near a business and / or financial hub of a major city like Karachi, Hyderabad,

Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc. The proposed agency will provide general and executive security guard services to the corporate / business sector during the initial phase of operations. All guards are proposed to be armed guards.

66 personnel would be required to manage the operations of the security agency including 58 armed guards.


4


Total cost estimates are Rs. 2.19 million, with a fixed investment of Rs. 1.40 million and an initial working capital requirement of Rs. 0.79 million.

Given the cost assumptions IRR and payback are 52% and 2.16 years respectively.

6. BRIEF DESCRIPTION OF PROJECT AND SERVICE

This pre-feasibility gives insights into various aspects of how to set-up a security agency and outlines the basic process involved in running the enterprise as a profitable business. The document is designed to provide relevant details to facilitate the entrepreneur in making a decision by providing various technical, legal and business details.

Security Agencies offer various services such as security guard services, executive escort services, security / burglar alarm, vehicle tracking, armored car services and cash-in -transit services, etc. The proposed Security Agency is envisaged to provide only general and executive security guard services to the corporate / business sector through armed personnel deployments. Security management staff including Manager (operations) and Shift Supervisors would facilitate and manage security services while the prospective entrepreneur will undertake the recruitment, training, business promotion and management activities.

The Security Agency is proposed to be established as a Private Limited

Company or as a Single Member Company under the Companies Ordinance 1984.

Technology: The proposed Agency will deploy latest communication technology and technology based security solutions to provide services to Businesses and Corporate Clients.

Location: The office is proposed to be established at a rented premise near a business and/or financial hub in a major city like Karachi, Hyderabad, Lahore,

Gujranwala, Faisalabad, Sialkot, Gujrat, Multan, Rawalpindi, Islamabad, Quetta or Peshawar etc.

Services: The Agency is proposed to provide general and executive security guard services by deploying armed guards. The set-up would have a capacity to deploy up to 100 armed guards.

Target Market: Karachi, Hyderabad, Larkana, Sukkur, Multan, Lahore,

Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc. are major target markets for the services.


5


Employment Generation: The proposed project will provide direct employment to 66 people. Financial analysis shows the agency shall be profitable from the very first year of operations.

7. CRITICAL FACTORS

Following guidelines can assist the prospective entrepreneur in running the agency successfully:

Build contacts/linkages in the corporate sector

Recruit trained and experienced resources

Provide adequate training

Provide reasonable pay compensation

Offer professional working environment

OPERATIONAL CAPACITIES

Considering a twelve (12) hour shift / duty cycle it is assumed that the proposed security company has the capacity to hire and deploy 100 security guards. However, the company is estimated to operate with 58 security guards with an investment cap of Rs. 2.2 million. Sales are estimated to increase by 10% due to increase in service charges. The license to operate from the Provincial Home

Department would also include 58 weapons licenses.

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Location for a security agency office largely depends on the type of security services provided to the client. For the success of the project, it is important to find a location in or near a business and / or financial hub of a major city like Karachi, Hyderabad, Larkana, Sukkur, Multan, Lahore, Gujranwala, Faisalabad, Sialkot, Gujrat, Rawalpindi, Islamabad, Quetta, Hub, Lasbela or Peshawar etc.

Establishing the office in large cities would have an advantage of being close to large corporate clients, financial institutions and multinational clients.

10. POTENTIAL TARGET MARKETS/CITIES

The market for security services is growing at an average of 5 6% annually and relies heavily on corporate clients that require specialized quality security services. Multinationals, local conglomerates, manufacturing companies, business and trade hubs, financial institutions and telecom sector companies etc., are all based in urban areas and even more concentrated in large


6


metropolitan cities of the country. The proposed security agency may be established in any of the major cities of the country.

11. SERVICE PROCESS FLOW

The service delivery diagram of the proposed security agency is as follows.

Service Flow Process

Agreement

Temporary

Yes

Deployment of

Client

Personnel

Service

Permanent

Coordination

Evaluation

deployment of

Location survey

personnel/

supervisor

No

12. PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of this project. Various cost and revenue related assumptions along with results of the analysis are outlined in this section.

The projected Income Statement, Cash Flow Statement and Balance Sheet are attached as appendices.

12.1 Project Economics

The following table shows internal rate of return and payback period for the proposed private security agency.

Table 1 - Project Economics

Description

Internal Rate of Return (IRR)

Payback Period (yrs)

Net Present Value (NPV)

Details

52%

2 .16 years

Rs 3,905,633

Returns on the project and its profitability are highly dependent on the quality / experience and training of human resource and security guards, linkages with the corporate sector and marketing efficiency.


7


12.2 Project Financing

Following table provides details of the equity required and variables related to bank loan:

Table 2 - Project Financing

Description

Details

Total Equity (10%)

Rs. 219,190

Bank Loan (90 %.)

Rs.1,972,710

Markup to the Borrower (%age/annum)

08%

Tenure of the Loan (Years)

08

Grace period (year)

01

12.3 Project Cost

Following requirements have been identified for operations of the proposed business:

Table 3: Capital Investment for the Project

Capital Investment

Amount (Rs.)

Office Renovation Cost

100,000

Furniture & fixtures

156,000

Weapons, Communication & Office Equipment

568,500

Advance Rent

216,000

Preliminary Expenses/ Licensing Costs

363,000

Total Capital Costs

1,403,500

Initial Working Capital

788,400

Total Project Cost

2,191,900

12.4 Space Requirement

The office space required to operate the proposed security agency is estimated to be around 800 sqft. The allocation of space between different sections of the office is as follows:

Table 4: Space Requirement

Space Requirement (in ft.)

Area

Cost / sq

Renovation

(sq ft.)

ft. (Rs.)

Costs (Rs.)

Office

120

125

15,000

Accounts and Administration

120

125

15,000

Operations hall

120

125

15,000


8


Security Agency

Reception

40

125

5,000

Guard waiting area

120

125

15,000

Store & armory

120

125

15,000

Washroom/record room /

160

125

20,000

others

Total Area

800

100,000

The premises renovation cost of Rs. 100,000/- would be depreciated at the rate of 10% per annum using diminishing balance method.

12.5 Arms and Communications Equipment

Following arms and equipment will be required for the field operations of the security agency:

Table 5: List of Weapons and Communication, Office & Other Equipment

Description

Quantity

Cost

Total

Rs/unit

(Rs.)

Metal Detector

6

4,000

24,000

Repeater (Durra Made)

15

7,500

112,500

Pistol (0.30 Caliber)

14

7,500

105,000

Radio Communication System

1

40,000

40,000

(base)

Hand/Portable Communications

5

15,000

75,000

Units

Computers

2

26,000

52,000

Printers

1

35,000

35,000

Fax machine

1

25,000

25,000

Consumer electronic items (water

100,000

cooler, AC, electric kettle etc.)

Total

568,500

Communications equipment and local weapons are easily available in the market and an entrepreneur has the choice to select from international brands such as

Winchester, Berretta, SIG Sauer, Glock etc., Chinese weapons or Local Darra Made weapons and communication equipment made by Motorolla, Kenwood and

ICom are also available in the local market and are used by most companies.


9


12.6 Furniture and Fixtures

A total of Rs. 156,000/- is required for purchase of office furniture and fixture for the proposed Security Agency.

The following table gives an estimated breakup:

Table 6: Furniture and Fixtures Costs

Description

Quantity

Cost /Unit (Rs.)

Amount (Rs.)

Chairs

10

2,700

27,000

Sofa Set

02

20,000

40,000

Office Tables

03

8,000

24,000

Office Chairs

05

5,000

25,000

Cupboard / Shelves

Lump sum

40,000

40,000

Total

156,000

The office furniture & equipment costs are estimated to depreciate at the rate of

10% per annum using diminishing balance method for the projected period.

12.7 Human Resource Requirement

The following table presents the manpower requirement for the proposed Security Agency:

Table 9: Human Resource Requirement

Description

No. of

Salary per

Total monthly

Employees

month (Rs.)

salary (Rs.)

Owner Manager/Director

1

30,000

30,000

Manager Operations

1

20,000

20,000

Shift Supervisor

2

13,000

26,000

Deployment Supervisor

2

13,000

26,000

Accountant

1

18,000

18,000

Special Guards

6

13,000

78,000

General Guards

52

10,000

520,000

Office boy

1

10,000

10,000

Total Staff

66

728,000

Owner / Director: Due to sensitivity of the business, Agency Director has critical responsibilities. He would be required to directly interact with management staff and closely monitor the Agencys day to day activities.


10


Manager Operations: Manager Operations is proposed to be reporting directly to the Owner / Director and would be responsible for supervising operations in the field/locations. His assignment depends on the level and span of operations that the agency is carrying out on a particular location. Manager Operations should preferably be an Ex-Serviceman.

Shift and Deployment Supervisors: All supervisors would be operational in-charge of security locations. They would report to Manager Operations and assign duties and monitor performance of the guards. They will also coordinate with clients security officers.

Guard / Special Guard: Guard would be a Sipahi level person and would report to the Supervisor. The guard would perform duties assigned to him such as guarding entrance and exit of the premises, checking vehicles movement and carrying out physical and baggage search etc. Special Guards would be a commando level ex-serviceman, who generally would perform Executives Escort duty and would be responsible for their security. Retired SSGC commandos are recommended to be recruited for this position.

The proposed project would need a total of 66 personnel to provide the security services. Salaries of all employees are estimated to increase by 10% annually.

12.8 Revenue Generation

Revenue projections for the proposed security agency include sales streams from the following services:

Table 10: Revenue

Service

First Year Sales

Service

Guards

Charges

Revenue (Rs.)

(Rs./guard)

General Security

52

15,000

9,360,000

Service

Executive Security

06

21,450

1,544,400

Services

Total Sales Revenue

10,904,400

Sales are expected to grow by 10% every year. The prices used to calculate the gross revenue earned are based on the billing rate at which the Agency will charge the customer. The service charges are estimated at 1.5 x guard salary and 1.65 x guard salary for general and executive security services respectively.

Guard salaries are also estimated to increase at the rate of 10% per annum. It is


11


assumed that any expiring security contract will either be extended or be replaced by a new one.

12.9 Other Costs

Arms and Equipment Maintenance: All arms and equipment require regular maintenance which costs around 1% to 5% of the arms/equipment costs depending upon the usage. The maintenance cost for arms and equipment is assumed at 2% of total cost, included in the operating cost estimates.

Rent and Deposits: The proposed premises will be acquired on a rental basis with 3 months security deposit and 3 months advance rent after which, rent will be payable on a monthly basis. The monthly rent is estimated at approximately Rs. 45/ sq. ft. amounting to Rs. 36,000 per month for the proposed security company office (800 sq. ft.). Rent is assumed to increase by 10% per annum.

Utilities Requirements: The following table presents break-up of utilities on a monthly basis:

Description

Monthly

Charges

(Rs.)

Electricity

18,000

Water

400

Telephone

6,000

Total

24,400

Working Capital Requirements: It is estimated that an additional amount of approximately Rs. 788,400/- will be required as cash in hand to meet the working capital requirements during operations. The requirement is based on the rent, utilities and salaries expenses for at least one month. The following table gives the break-up.

Description

Month

Monthly

Charges (Rs.)

Utilities

01

24,400

Salaries

01

728,000

Rent

01

36,000

Total

788,400


12


Guard Uniforms: Uniforms for guards would include shirt, trousers, belt, cap, boots and socks (two uniforms per guard) and would be purchased annually. The cost of uniforms for 63 personnel is estimated at Rs. 151,200

(Rs. 1200/uniform). The cost of uniforms is estimated to increase by 10% per year.

Preliminary & Licensing Expenses: The provision for preliminary expenses is assumed to be Rs. 20,000. The cost of license to operate and licenses for weapons and communications equipment is assumed to be Rs. 343,000.

These pre-operating expenses will be amortized equally over a 5 year period.

Miscellaneous & Maintenance Expenses: Rs. 25,500 / month (850 per day) is assumed to be incurred for miscellaneous and arms maintenance expenses, which are expected to increase at the rate of 10% per annum for the projected period.

Office Expenses: Monthly office expenses for the security company are estimated to be Rs. 21,000 (700 per day). These expenses are estimated to increase at the rate of 10% per annum for the projected period.

Taxation: The business is assumed to be run as a Single Member Company; therefore, tax rates applicable on the income of a non-salaried individual taxpayer are used for income tax calculation of the business.

Cost of Capital: The cost of capital is explained in the following table:

Particulars

Rate

Required return on equity

20.0 %

Cost of finance

08.0 %

Weighted average cost of capital

09.2 %

The weighted average cost of capital is based on the debt/equity ratio of

90:10.


13


13. CONTACT DETAILS OF SUPPLIERS & CONSULTANTS

Various security companies operating in Karachi and other cities may be contacted for consultancy / guidance.

Aamir Aziz, Security Consultant

Punjab Arms & Ammunition Company

Muhafiz Security (Pvt.) Ltd.

3-4, Mall View Plaza, NilaGumbad

A-1/3,West Land Trade Centre, 3rd

Lahore

Floor, Block 7&8,K.C.S.H.,Shaheed-e-

Tel: 042 - 37231167

Millat Road, Karachi

Tel: (92 - 21) 34550910, 34556331

Fax: (92 - 21) 34556331


14


ANNEXURE

Income Statement

PRIVATE SECURITY AGENCY

Projected Income Statement (Rs.)

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Revenue

10,904,400

11,994,840

13,194,324

14,513,756

15,965,132

17,561,645

19,317,810

21,249,591

23,374,550

25,712,005

Bad debts

54,522

59,974

65,972

72,569

79,826

87,808

96,589

106,248

116,873

128,560

Net Sales/Revenue

10,849,878

11,934,866

13,128,352

14,441,188

15,885,306

17,473,837

19,221,221

21,143,343

23,257,677

25,583,445

Cost of services provided

8,551,200

9,406,320

10,346,952

11,381,647

12,519,812

13,771,793

15,148,972

16,663,870

18,330,257

20,163,282

Gross Profit

2,298,678

2,528,546

2,781,400

3,059,540

3,365,494

3,702,044

4,072,248

4,479,473

4,927,420

5,420,162

General & Administrative Expenses

Salaries

336,000

369,600

406,560

447,216

491,938

541,131

595,244

654,769

720,246

792,270

Utilities Expense

292,800

322,080

354,288

389,717

428,688

471,557

518,713

570,584

627,643

690,407

Rent Expense

432,000

475,200

522,720

574,992

632,491

695,740

765,314

841,846

926,030

1,018,633

Licenses renewal charges

52,000

57,200

62,920

69,212

76,133

83,747

92,121

101,333

111,467

122,613

Accidental and Life Insurance Expense

306,000

336,600

370,260

407,286

448,015

492,816

542,098

596,307

655,938

721,532

Office, POL Expenses

252,000

277,200

304,920

335,412

368,953

405,849

446,433

491,077

540,184

594,203

Amortization

72,600

72,600

72,600

72,600

72,600

-

-

-

-

-

Depreciation Expense

82,450

74,205

66,785

60,106

54,095

48,686

43,817

39,436

35,492

31,943

Subtotal

1,825,850

1,984,685

2,161,053

2,356,541

2,572,914

2,739,526

3,003,741

3,295,352

3,617,000

3,971,602

Operating Income

472,828

543,861

620,348

703,000

792,581

962,518

1,068,507

1,184,121

1,310,420

1,448,561

Financial Charges (08% Per Annum)

157,817

149,900

131,718

112,026

90,701

67,605

42,592

15,503

-

-

Earnings Before Taxes

315,011

393,961

488,630

590,973

701,880

894,913

1,025,915

1,168,618

1,310,420

1,448,561

Tax

-

-

8,863

19,097

30,188

56,737

76,387

97,793

119,063

139,784

Net Profit

315,011

393,961

479,767

571,876

671,692

838,176

949,528

1,070,825

1,191,357

1,308,777

Monthly Profit After Tax

26,251

32,830

39,981

47,656

55,974

69,848

79,127

89,235

99,280

109,065


15


14.2 Statement of Cash Flow


Projected Statement of Cash Flows (Rs.)

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Cash Flow From Operating Activities

Net Profit

-

315,011

393,961

479,767

571,876

671,692

838,176

949,528

1,070,825

1,191,357

1,308,777

Add: Depreciation Expense

-

82,450

74,205

66,785

60,106

54,095

48,686

43,817

39,436

35,492

31,943

Amortization Expense

-

72,600

72,600

72,600

72,600

72,600

-

-

-

-

-

(Increase) / Decrease in Receivables

-

(227,175)

(22,718)

(24,989)

(27,488)

(30,237)

(33,261)

(36,587)

(40,245)

(44,270)

(48,697)

Net Cash Flow From Operations

-

242,886

518,048

594,162

677,094

768,151

853,601

956,758

1,070,015 1,182,579

1,292,022

Cash Flow From Financing Activities

Receipt of Long Term Debt

1,972,710

(237,247)

(256,939)

(278,264)

(301,360)

(326,373)

(353,462)

Repayment of Long Term Debt

-

(219,065)

Owner's Equity

219,190

Net Cash Flow From Financing Activities

2,191,900

-

(219,065)

(237,247)

(256,939)

(278,264)

(301,360)

(326,373)

(353,462)

-

-

Cash Flow From Investing Activities

Arms and Communication Eq. Purchase

(568,500)

Renovation

(100,000)

Preoperating Costs

(343,000)

Furniture

(156,000)

Preliminary Expenses

(20,000)

Advance Rent

(216,000)

(1,403,500)

-

-

-

-

-

-

-

-

-

-

NET CASH FLOW

788,400

242,886

298,983

356,915

420,155

489,886

552,241

630,385

716,554

1,182,579

1,292,022

Cash at the Beginning of the Period

-

788,400

1,031,286

1,330,270

1,687,185

2,107,340

2,597,226

3,149,467

3,779,852

4,496,406

5,678,985

Cash at the End of the Period

788,400

1,031,286

1,330,270

1,687,185

2,107,340

2,597,226

3,149,467

3,779,852

4,496,406

5,678,985

6,971,008


16


14.3 Balance Sheet


Projected Balance Sheet (Rs.)

Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Assets

Current Assets

Cash & Bank Balance

788,400

1,031,286

1,330,270

1,687,185

2,107,340

2,597,226

3,149,467

3,779,852

4,496,406

5,678,985

6,971,008

Account Receivable

-

227,175

249,893

274,882

302,370

332,607

365,868

402,454

442,700

486,970

535,667

Prepaid Rent

216,000

216,000

216,000

216,000

216,000

216,000

216,000

216,000

216,000

216,000

216,000

Pre Operating Costs

363,000

290,400

217,800

145,200

72,600

-

-

-

-

-

-

Total Current Assets

1,367,400

1,764,861

2,013,962

2,323,266

2,698,310

3,145,833

3,731,335

4,398,307

5,155,106

6,381,955

7,722,674

Fixed Assets

Arms and Communication & Other

Equipment

568,500

511,650

460,485

414,437

372,993

335,694

302,124

271,912

244,721

220,249

198,224

Furniture & Fixtures

156,000

140,400

126,360

113,724

102,352

92,116

82,905

74,614

67,153

60,438

54,394

Premises Renovation

100,000

90,000

81,000

72,900

65,610

59,049

53,144

47,830

43,047

38,742

34,868

Total Fixed Assets

824,500

742,050

667,845

601,061

540,954

486,859

438,173

394,356

354,920

319,428

287,485

Total Assets

2,191,900

2,506,911

2,681,807

2,924,327

3,239,264

3,632,692

4,169,508

4,792,663

5,510,026

6,701,383

8,010,160

Owner's Equity

219,190

534,201

928,162

1,407,929

1,979,805

2,651,497

3,489,673

4,439,201

5,510,026

6,701,383

8,010,160

Long Term Liability

1,972,710

1,972,710

1,753,645

1,516,398

1,259,459

981,195

679,835

353,462

(0)

-

-

Total Equity & Liabilities

2,191,900

2,506,911

2,681,807

2,924,327

3,239,264

3,632,692

4,169,508

4,792,663

5,510,026

6,701,383

8,010,160


17


Security Agency

14.4 Useful Project Management Tips

Technology

List of Arms & Equipment

Description

Quantity

Metal Detector

6

Repeater (Durra Made)

15

Pistol (0.30 Caliber)

14

Radio Communication System

1

(base)

Hand/Portable Radio

5

Communications Units

Required Spare Parts & Consumables: Suppliers credit agreements and availability as per schedule of maintenance be ensured before start of operations.

Energy Requirement: The energy requirements should be properly assessed and alternate source of energy for critical operations must be arranged in advance.

Machinery Suppliers: Training and After Sales Services should be sought from suppliers.

Quality Assurance Equipment & Standards: Product quality standards must be defined and a system of check should be instituted. This improves credibility.

Marketing

Service & Packaging: Expert help may be engaged for design & development of Services.

Ads & P.O.S. Promotion: Business promotion and dissemination through banners and launch events is recommended. Product Brochures should be developed from quality service providers.

Sales & Distribution Network: Expert advice and distribution agreements are required.

Price - Bulk Discounts, Cost plus Introductory Discounts: Price should never be allowed to compromise quality. Price during introductory phase may be lower and used as a promotional tool. Service cost estimates should be carefully documented before price setting.


18


Security Agency

Human Resources

List of Human Resource

Description

No. of

Employees

Owner Manager / Director

1

Manager Operations

1

Shift Supervisor

2

Deployment Supervisor

2

Accountant

1

Special Guards

6

General Guards

52

Office boy

1

Total Staff

66

Adequacy & Competencies: Recruitment of skilled and experienced staff should be undertaken.

Performance Based Remuneration: Attempt to manage human resource cost should be focused through performance measurement and performance based compensation.

Training & Skill Development: Encouraging training and skill of self & employees through experts and exposure to best practices is a route to success. Least cost options for Training and Skill Development (T&SD) may be linked with compensation benefits and awards.


19


14.5 Useful Links

Prime Ministers Office www.pmo.gov.pk

Small & Medium Enterprises Development Authority (SMEDA) www.smeda.org.pk

National Bank of Pakistan (NBP)

www.nbp.com.pk

First Women Bank Limited (FWBL)

www.fwbl.com.pk

Government of Pakistan

www.pakistan.gov.pk

Ministry of Industries & Production

www.moip.gov.pk

Ministry of Education, Training & Standards in Higher Education http://moptt.gov.pk

Government of Punjab

www.punjab.gov.pk

Government of Sindh

www.sindh.gov.pk

Government of Khyber Pakhtunkhwa

www.khyberpakhtunkhwa.gov.pk

Government of Balochistan

www.balochistan.gov.pk

Government of Gilgit Baltistan

www.gilgitbaltistan.gov.pk

Government of Azad Jammu & Kashmir

www.ajk.gov.pk

Trade Development Authority of Pakistan (TDAP)

www.tdap.gov.pk


20


Securities & Exchange Commission of Pakistan (SECP)

www.secp.gov.pk

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) www.fpcci.com.pk

State Bank of Pakistan (SBP)

www.sbp.org.pk

15. KEY ASSUMPTIONS

Particulars

Assumption

Sales Increase

10 % per year

Increase in Staff Salaries

10 % per year

Increase in Utilities (Electricity / Water /

10 % per year

Gas)

Increase in Rent

10 % per year

Increase in Incidental Expenses

10 % per year

Increase in Office Expenses

10 % per year

Debt / Equity Ratio

90 : 10

Depreciation

o

Renovation

10 % per annum (Diminishing

Balance)

o

Arms and Equipment


Balance)

o

Office Furniture &Fixtures


Balance)

Bad debts

0.5 % of Sales/Services

Loan Period

8 Years

Loan Grace Period

1 Year

Loan Installments

Monthly

Financial Charges (Loan Rate)

08 % per annum

Tax Rate

Tax rates for OMC


21

Documents

202614965 Business Plan for Agency