Universiti Teknologi Mara

3 in 1 Vacuum Cleaner

March 2012 July 2012

Group Members:-Muhammad Azim Bin Mohd Nor 2008400794Muhammad Zulfadli Bin Mohd Noor 2008400862Muhammad Ali Bin Ahmad Seburi 2008400638Mohd Faizal Bin Mohamed 2008400834

Bachelor of Engineering (HONS.) MechanicalGroup: EMD8M10

Table of ContentContentsPage

1.0 Executive summary - Brief description of the business and product concepts - The target market and projections - The competitive advantages - The profitability - The management5 - 8

2.0 Product or service description.2.1 Describe the product or service to be produced or sold2.2 Application of the product or service2.3 Emphasize unique features of the product or service2.4 Define the presence and state of development of the product or service2.5 Describe any patent or other proprietary features of the product or service2.6 Opportunities for the product line or the development of related product or service8 - 11

3.0 Technology description.12 - 14

4.0 Market research and analysis.4.1 Customer4.2 Market size and trends4.3 Competition and competitive edges4.4 Estimated market share and sales4.5 Marketing strategy15 - 21

5.0 Management team.5.1 Organization chart5.2 Key management personnel5.3 Management compensation and ownership5.4 Supporting professional advisor and services22 - 29

6.0 Financial plan.6.1 Start-up cost6.2 Working capital6.3 Start-up capital and financing6.4 Cash flow statement6.5 Income statement6.6 Balance sheet30 - 37

7.0 Project milestones.38 - 39

8.0 Conclusions.39

9.0 Appendices.40

1.0 EXECUTIVE SUMMARYThis product is a based on the incremental innovation for the vacuum. This electronic equipment is chosen based on the dirt problems occur in the house and vehicle like car. It is because of the high possibility that these places will be dirty due to times and how the persons used their place. An example is that, sometimes the water can be spill at the car seat, the old usage unclean carpet and sometimes from shoes that we uses for car foot pad. These problems will become worse especially for house usages and traveller peoples because the water that spill in a car seat or carpet will produce unpleasant odour that happens from the evaporation process inside the house and car. The main objective of this incremental innovation design for this vacuum is to help the peoples and community to solve these problems. The common portable vacuum is only capable to perform a suction process and less durability of batteries. The three components of creativity that is knowledge, motivation and creative thinking had introduced to the different common vacuum that is 3 in 1 vacuum that capable to perform a suction, blower and as odour to the house and car. Therefore, this equipment will help the parent to solve dirt problem.The concept of 3 in 1 vacuum is it can be used to remove a dust, help to solve the spill of water problem and odour a car. This product has a three mode that is suction, blower and odour mode. There are two fan that is suction fan and blower fan. This two fan will produce a suction process when customer needs to remove a dust. Besides that the chosen of the fan that capable to perform up to 3 times faster than conventional motors and will creates the most power-efficient cordless vacuum cleaner. The second fan that is blower fan for a second mode is a blower fan that is a small fan but can produce a greater power to dry any moist surface. Besides that, the heat inside the vacuum will be blow into the working area and help to dry and moist a surface. After that area is completely dry, the odour mode is used to make sure that area is clean and feel comfortable.

Our target market is a housewife because of the higher potential to this community to face dirt problem at home and vehicle. For the short range planning, we try to get the trust from Malaysian population and for long term range, we target in between 2 years, we will export our product to Indonesia, Thailand and Singapore.This product is different from the common portable vacuum that consists of three modes that is suction, blower and odour with a reasonable price and good features. It will take as a good advantage rather than others vacuum company or our competitor because of this product is a new innovation for the common vacuum by addition of blower and odour mode. Adapting the function of the blower, suction of typical vacuum and combining with fragrance and aroma scent into one functional home appliance. The ergonomic aspect also had been adapted in this design because it had equipped a wheel, gripper, easy to use and lightweight. This product will give a good profit to our company because of the increasing of Malaysian peoples about 27.6 million will increase the possibility to this product to be sold in this country. The market trend for this product is related on the two levels of age that is adult and children. This product can be applied at home and vehicle. The common problems for adult at home are dust problems and children commonly caused dirt at a car. This product had been design to solve that kind of problems and it will increase a potential to the Malaysian people to buy our product and can increase our company profit.

In order to manage our company to produce this high quality product, we already organized our team members which are:

Chief Executive OfficerMuhammad Azim Bin Mohd NorChief Marketing OfficerMuhammad Ali Bin Ahmad SeburiCEOChief Technology OfficerMuhammad Zulfadli BinMohd NoorChief Financial OfficerMohd Faizal BinMohamed

The chief executive officer (CEO) is to provide leadership to position the company at the forefront of the industry. Develop a strategic plan to advance the company's mission and objectives and to promote revenue, profitability and growth as an organization. Oversee company operations to insure production efficiency, quality, service, and cost-effective management of resources.

The chief technology officer (CTO) reports to the CEO and is responsible for establishing the companys technical vision and leading all aspects of the companys technology development. The CTO is the company top technology executive, playing an integral role in the companys strategic direction, development, and future growth.

The chief marketing officer (CMO) has responsibility for all areas of marketing, including sales, customer experience, public policy, media relations, promotion, web and electronic services and the corporate programs of a company or foundation.

The chief financial officer (CFO) has responsibility for overseeing and directing the organization's financial goals, objectives, and budgets. Meets with the Board and other company executives to develop financial goals and budgets

2. 0 PRODUCT DESCRIPTION

2.1 Description of the Product to Be Produces or Sold

Figure 2.1: 3 in 1 Vacuum Cleaner

Nowadays, most of home are using vacuum cleaner as a importance home appliance. Most of the vacuum for home usage are big and heavy, difficult to handle and not a portable. That means conventional vacuum need a power cord to be run.

Introduce the 3 in 1 vacuum cleaner which is portable, easy to handle and more stronger and power suction. 3 in 1 vacuum cleaner has all the entity for cleaning process in the house and car vehicle. It has vacuum for suction the unwanted dust and dirt, blower for dried off the wet surfaces and a fragrance for make the clean place smell well. Our product can be described as a multipurpose Vacuum. Adapting the function of the blower, suction of typical vacuum and combining with fragrance and aroma scent into one functional home appliance. This multipurpose vacuum are small in it shape, batteries charging method and easy to handle.

2.2 Application of the Product

Multipurpose vacuum can be used in two difference place like house and vehicle like car and van. By using the batteries, it does not require any extension of wire to be run. By only charge it batteries it can be take to any place. House can be describes as the place where most of the people enjoy themselves. This circumstance can only be achieved with clean and fresh air on it. The existence of carpet in house is essential especially at the place that is cold (but now the hot place also uses carpet in their house). We knows that the bacteria exist in the carpet can only be remove by using a vacuum cleaner. This is due to the suction produce by the vacuum are so powerful that can suck small bacteria.

The furniture that used in some of the house is a lot with make difficult the process of cleaning especially by using big extension wire vacuum. The flow air also trap in the house with would make the lower percentage of fresh air and difficulty for dried any kind of water spill such in the carpet. The location of difficult to reach such a small and high space is the place where a lot of dust can be trap. This problem can be solving using a small handy vacuum cleaner as we proposed.

Second place where most of the people are spending their life are inside their vehicle. When travelling using car or van many people are attempting to bring their food and drink into vehicle. These make the vehicle the place such a dump place. All the unwanted and remnants are put into the vehicle. Sometimes, the drinks also are spilled into the vehicle sit and carpet that would make an unpleasant smell. Food and drink that are leave in the vehicle will make a secure place to breed the insect such cockroach. In the vehicle also have the tight space like at the car door compartment. This difficult space can be only reach using a small tool to remove the dust and unwanted thing.

2.3 Description of Unique Features of the Product

Our 3 in 1 vacuum has the latest features compare to other vacuum that available in the markets today. Compared to the other product, most of the vacuum that has the blower that can do a cleaning process by water is not portable, big and heavy. Our product let the customer to experience the easy way in handling the vacuum cleaner. With the parameter of this vacuum such 0.29 m x 0.20 m x 0.20 m are small but have high power produces. The feature as listed as below. The future component in vacuum:1. Electric motor2. Suction and blower fan3. Perfume bottle and fragrance4. Batteries5. Different connecting tool6. Dust compartment7. Filter8. Casing

The main part of our product is the suction, blower and fragrance. For the suction and blower, we used different types of fan which for suction we used more power and for blower less power but enough for it function. The suction fan are covered with the filter that will avoid the dust and dirt from enter to it. The dust compartment used a mechanism that will make the dust for collect away from the filter so that the power produce will remain until the dust compartment is full of dust and dirt.

The second parts are blower. When the switch of the blower is on, there are mechanisms that will make the air blower not entering the suction compartment. As the blower is on, the third part fragrance can be set automatically to spray it aroma in the required surface. But if the customers want to spray manually also can. So the switch for the fragrance has auto, off, and on.

2.4 The Present and State Of Development of the Product or Service

Our 3 in 1 vacuum portable product is still in the paper stage where this stage can be upgrade to implement it. By our research for latest design, we see that our product can be develop due to most of the technology are available in the market such as the long period batteries usage and small motor for air blower with greater power that we want to put in our product. To make our product are available and can be acceptance to the customer the promotion of our product would cost RM 85,000 that will generate income RM 2,000,000.

2.5 Any Patents or Other Proprietary Features of the Product

We will patent the idea and concept of our 3 in 1 vacuum to be ours. Other related part that we also want to patent is the vacuum itself where the innovation and creativity need to be research and develop. The blower, dust compartment and fragmented bottle of the product we will find from other supplier that we know most of it have in the market. So there is two things we want to patent first is the idea and the concept of 3 in 1 portable vacuum and the vacuum that we want to develop. The registration of the patent may be made at the Registry of Patents, Intellectual Property Corporation of Malaysia.

2.6 Opportunities for the Product Line or the Development of Related Product

The opportunities for the product line to be develop after this is that we want to recommend to implementing the robotic application to this vacuum. These 3 in 1 vacuum can be automated, find, clean and spray the fragmented where are the dust and dirt has but the manual configuration is still needed for vehicle purpose.

3.0 TECHNOLOGY DESCRIPTION

Dust compartmentPerfume & water bottleCord plugHand gripperVacuum fanWheel Blower fanBatteries Other electrical and mechanical componentSwitch Filter

Figure 3.1: Overall view

Figure 3.2: Rear view

Figure 3.3: Bottom view

Our 3 in 1 vacuum portable cleaner are very innovative and creative idea. By combining all the method of cleaning a house and vehicle in one element is very innovative. Our product uses the latest technology that available in the market. Such as shown above the parts are switch, hand gripper, dust compartment, perfume and bottles, vacuum fan, filter, cord plug, wheel, blower fan, batteries and other electrical and mechanical component.

Vacuum technologyA vacuums suction is course by a difference in air pressure. An electrical fan reduces the pressure inside the machine by produce a high velocity. Atmospheric pressure then pushed the air through the carpet and into the nozzle, and so the dust is literally pushed into the dust compartment

Blower technologyThe process is by using the heat and dry air. When the blower fan is push the heat air out from the tool connector it will create the dry and hot air that can dried the moist surface.

NoItemDescription

1Switch Start and stop for suction and blower, and switch for perfumes.

2Hand gripperUsed foam gripper.

3Dust compartmentRadix Cyclone technology, patented technology that doesnt lose suction as you vacuum.

4Bottle (perfume and water)Can be refill depend on the customer need.

5Vacuum fan motorDigital motor, up to 3 times faster than conventional motors. Creates the most power-efficient cordless vacuum cleaner.

6FilterHygienic one-touch bin empty.

7Cord plugCan be connected with directly to the power supply or to the charging stand to charge batteries.

8Wheel Used polymer as it material.

9Blower fanSmall fan but have greater power to dries any moist surface.

10Batteries Lithium-ion batteries. Charging up to 12 hour. Can be used up to 4 hour continuously.

11Electrical and mechanical componentMotherboard of the vacuum.

Table 1: Vacuum Part

4.0 MARKET RESEARCH AND ANALYSIS4.1 CustomerAfter seeing the current problems, we know which customers we need to focus on, especially our main target market that will buy our products and automatically will give profit to our company. Firstly, the potential customers that we target are the car user and housewives. Besides that, we also try to target on the retailers. As we know, the car user will have problem in cleaning their car interior because of very narrow space. For the housewives and retailers, they must need a tool that makes their work easy in cleaning their homes and shops. We will supply our product to the customer by distribute it to the electrical shop and wholesale. Moreover, we will use internet as a medium to spread info about our product. We also will try to market our product to the nearest country such as Indonesia, Thailand and Singapore.4.2 Market Size and TrendsThe market size that we set to target is about 5,000 per year. Our strategy is to make 2 in 1 product that is different from the vacuum that the user have nowadays. The vacuum that user have only can suck up the trash and small rubbish. But by using our product, the user not only can suck up the trash, but they also can blow the rubbish that cannot suck up. We also try to give a reasonable price to the customer to overcome the current market share. Usually in current market, the price for a normal vacuum is about RM 200 RM 500. In our vision, we try to increase our market share about 10% each year. The major factors affecting the market growth are industry and socio-economic trends.

Figure 4.1: The normal vacuum price on market RM 206(left) and RM 399(right)The price and target units for our product : Potential sale (units) : 5,000 Cost per unit (RM) : x 400 Potential sale (RM) : 2,000,000After around 2 years, we try to distribute these products to Indonesia, Thailand and Singapore. The main factors that affect the market growth are the market size, because it will change the demand also. Increasing the size of the market is to ensure continuity of support on this product and to provide opportunities for market growth of this product. Furthermore, the market acceptance also is a part of important thing in market growth because it involves the interests of the market to purchase our product. New technology need acceptance by customers because it is difficult for the market to find the value of this product.

4.3 Competition and Competitive EdgesOur main competitors in the market now is the usual vacuum that user always use. The user has so many choices of vacuum in the market and the prices depend on the brand, design and it function. The quality of the product is the important thing in the eyes of customer, even the price is expensive, and sometimes the user will to pay because of the products quality. There are some weaknesses and differences of our competitor:Our new vacuumOld vacuum in marketRobotics Vacuum

We have 3 in 1 function, firstly to vacuum the rubbish and secondly to blow the rubbish that cannot vacuum.Only can vacuum the rubbishAutomatic vacuum

We have extra part at the vacuum that can spray perfume to the floor or carpet.Not have perfume sprayerNot have perfume sprayer

This vacuum is design in suitable size so that the user also can use in narrow place.Design is so big and difficult to use at narrow place.Design just for flat surface. Not suitable for car.

We also put battery, so that the user can have portable vacuum.Need electric source power to switch on the vacuum.Use fully battery and can charge.

Table 2: Differences and weaknesses of our product compare to existing product.Properties/Product.Our productExisting product

Market shareNew product, need acceptance by customersAlmost the user use nowadays

QualityGood quality because have 3 in 1 functionQuality depends on brands and price

PriceRM 400RM 200-500

PerformanceHigh performanceDepends on price

Market placeUser can find in electric shop and can order by internetUser can find in electric shop and sometimes can order in internet

TimingFor long time useDepend on product quality

Service and warrantyWarranty for 3 yearsDepend on product price

Table 3: Comparison of products properties

4.4 Estimated Market Share and SalesMarket share refers to estimated potential sales of the business after taking into consideration the market size and the competitors influences in the same market. Market share is often quoted in terms of percentage.

YEAR201320142015

SHARE (%)203060

SALES (UNIT)5,0007,50015,000

SALES (RM)2,000,0003,833,333 7,499,999

Table 4: Target market share in terms of 3 years

Name Of CompanyMarket Share

LG30%

Panasonic25%

Toshiba15%

Others30%

Table 5: Companies market share that always used by customers

4.5 Marketing StrategyThe marketing concept recognizes that the company's knowledge and skill in designing products may not always be meeting the needs of customers. It also recognizes that even a good sales department cannot sell every product that does not meet consumers' needs. When customers have many choices, they will choose the one that best meets their needs. So, we have decided that the type of customers group that we mostly target is housewives, car users, and retailers. This is our specific marketing philosophy and strategy of the company: Our mission is to fulfil the needs of customer that will makes their homes work faster and besides, we can earn good profit from our product. The customer satisfaction is our main priority that we will ask the customer feedback after using our product and try to improve our product. For the short range planning, we try to get the trust from Malaysian population. For long term range, we target in between 2 years, we will export our product to Indonesia, Thailand and Singapore. We try to make marketing strategies so that our product going to fit in the market place. There are some important things that we should consider to makes sure our business will not failure:

4.5.1 PriceThe price that we put after consider all of the cost of production is reasonable in the market. Refer to the analyze of the market price, we take some range of the price in the current market is around RM 200 RM 500 and more than that for better quality. The new vacuum that we produce is RM400 that will have 3 in 1 function. This is better compare to the other competitors price and function.

4.5.2 Service and Warranty PolicyOur product has a warranty for 3 years and only will cover when the product not have any damaged or broken. We will repair back the vacuum if have minor damage such as electric shock or same like that and surely will not take any charge. We try to repair back the product around 1 week from the product was send. If not, we will repay back the customer money, or replace back the vacuum with another new vacuum to satisfy the customer. The customers need to show back the receipt to us, so that we can accept the customer complain. All the repair and replacement will be done at our factory. 4.5.3 Advertising and promotionThe using of media to advertising and promotion is one of the best way, we also will promote our product by using this medium also. Firstly, we try to advertise and promote our product in the newspaper. This is one of the top advertising because all peoples like to read newspaper. We also will make some banner and give to the electric shop so that, they can put in front of their shop. This to medium is enough for us, so that we not use too much money for the starting time. Maybe when we get some profit, we will try to promote on television also.4.5.4 DistributionThis product we will sell to the retailers and electric shop. Besides that, we also will try to get the market on the supermarket such as Giant, Tesco, Carrefour and others. The product will supply to them by lorry. The cost of the transportation we will charge by the distance from our company. We also will accept the order from customer from the internet, but the orders must more than 10.

5.0 MANAGEMENT TEAM5.1 Organization Chart

Chief Executive OfficerMuhammad Azim Bin Mohd NorChief Marketing OfficerMuhammad Ali Bin Ahmad SeburiCEOChief Technology OfficerMuhammad Zulfadli BinMohd NoorChief Financial OfficerMohd Faizal BinMohamed

5.1.1 Key Management Roles

Key Management RolesName

Chief Executive OfficerMuhammad Azim Bin Mohd Nor

Chief Marketing OfficerMuhammad Ali Bin Ahmad Seburi

Chief technology OfficerMuhammad Zulfadli Bin Mohd Noor

Chief Financial OfficerMohd Faizal Bin Mohamed

5.2 Key Management Personnel

Name & PositionCareer Highlight

Muhammad Azim Bin Mod NorChief Executive Officer (CEO)Educations: Bachelor of Engineering (HONS) Mechanical, UiTM Shah Alam. Masters degree in Business Administration (MBA), UiTM Shah AlamCareer Past Experience: Has 7 years experience as a Research and Design Engineer at DEFTECH SDN BHD

Muhammad Zulfadli Bin Mohd NoorChief Technology Officer (CTO)Educations: Bachelor of Engineering (HONS) Mechanical, UiTM Shah Alam. Masters degree in Mechanical Engineering, UiTM Shah Alam.Career Past Experience: Has 7 years experience as a Research and Design Engineer at Panasonic (M) SDN BHD

Muhammad Ali Bin Ahmad SeburiChief Marketing Officer (CMO)Educations: Bachelor of Engineering (HONS) Mechanical, UiTM Shah Alam. Masters in Business Administration (MBA), UiTM Shah Alam.Career Past Experience: Has 7 years experience as a Marketing Manager at Solar Alert SDN BHD.

Mohd Faizal Bin Mohamed Chief Financial Officer (CFO)Educations: Bachelor of Engineering (HONS) Mechanical, UiTM Shah Alam. Bachelor of Accountacy,UiTM Shah Alam.Career Past Experience: Has 5 years experience as a Marketing Manager at Has 2 years experience as a lecturer at UTM Skudai.

5.2.1 Duties and responsibilities of the key members of the management team.Name & PositionDuties and Responsibilities

Muhammad Azim Bin Mohd NorChief Executive Officer (CEO)- To implement the strategic goals and objective of the company.- To give direction and leadership towards the achievement of the company philosophy, mission, strategy, and its annual goals and objectives.- To make a good relationship between the customer and the company.

Muhammad Zulfadli Bin Mohd NoorChief Technology Officer (CTO)- Lead the execution of technology strategy for technology platforms, partnerships, and external relationships. - Build and manage a top-flight t technology team and oversee research and development, as well as project management.- Anticipate and react to major technology changes to ensure the maintenance of company leadership in the competitive landscape.

Muhammad Ali Bin Ahmad SeburiChief Marketing Officer (CMO)- Facilitate growth, sales, and marketing strategies at our company- Develop competitive analysis/market intelligence, prospecting, product and market development, pricing, promotions, communications and budgets, sales force effectiveness, strategic planning, services units and revenue retention and growth.

Mohd Faizal Bin MohamedChief Financial Officer (CFO)- Develop and implement and organization's financial goals.- Oversee the investment of funds and manage associated risks.- Develop and monitor policies and procedures within generally accepted accounting principles and corporate guidelines to ensure sufficient cash flow, reduced operating costs, and increased revenues.

5.3 Management Compensation and Ownership5.3.1 Management OwnershipName Monthly SalaryShare of OwnershipAmount of Equity Investment

Muhammad Azim Bin Mohd NorRM 3,900 28% RM 162,251

Muhammad Zulfadli Bin Mohd NoorRM 2,700 24% RM 139,073

Muhammad Ali Bin Ahmad SeburiRM 2,700 24% RM 139,073

Mohd Faizal Bin MohamedRM 2,700 24% RM 139,073

TOTALRM 12,000 100% RM 579,470

5.3.2 Management Compensation5.3.2.1 Monetary CompensationNo.Compensation

1Salary increment per year

2Six months bonus to all company staff

3Sales commission to all company staff

4Allowance after working hour job

5Employee Health Insurance Plan

6Paid Sick Leave

7Dental Insurance

5.3.2.2 Non Monetary CompensationNo.Compensation

1Wellness Program

2Parking Privileges

3Business Cards & Title

4Education Plan

5.4 Supporting Professional Advisor and ServicesSupporting professional advisor and services is a support or observer from the others organization to help the company management. In the design and fabrication field, there are several major things that needed to be focus and support from others organization such as in term of law and regulations advisor, financial advisor, quality advisor and transportation advisor. Law and regulations advisor is functions to help our company to prepare the rules and regulations that involve with our product that important to protect our company from the legal action such as about a warranty that our company can cover is anything happens or accident to the customers while using our product, Besides that, it also important to protect our company property, staff, health and safety environment (HSE) insurance and product patent.Financial advisor is important to play a role as an adviser and monitor to the company financial management. The company financial advisor will educated our staff especially a financial department about the best ways to manage company financial by make a seminar or events to our company. By using a financial advisor, it will ensure that our company financial is managing in a proper ways.Quality advisor is functions to help our company to check and ensure our product quality before being patent and sell to our customer. Quality advisor will give an advice in terms of the product design that includes the design, ergonomic and safety aspects. Besides that, it also will give a new knowledge to our company by introduce the latest technology that will increase our productivity.Transportation advisor is to play a role as an adviser of the transportation management. They will help our company to educate about the transportation management and it is important because the product delivery need to be on time to satisfy the customers needed. They will educate our transportation management in term of to reduce the time to deliver our product by make sure all the transport vehicle is always in good condition to avoid any delay.

5.4.1 List of Professional AdvisorName of Professional AdvisorService Provided

Kuala Lumpur Legal Aid CentreTingkat 9, Wisma Kraftangan,No. 9, Jalan Tun Perak,50050 Kuala Lumpur- As a advisor for the rules and term for the company staffs, company property, insurance, customers and product.

Malaysia Venture Capital Management Berhad (545446-U) Level 10, Menara Bank Pembangunan Bandar Wawasan 1016, Jalan Sultan Ismail 50300 Kuala Lumpur Malaysia- Main investor of the company- To monitor and advise company management.

SIRIM BHDNo.1, Persiaran Dato' Menteri,Section 2, P.O.Box 7035,40700 Shah Alam, Selangor Darul Ehsan.- As a advisor for the research and design (R&D) management.-Give new information and training about the latest technology.- Help to check a quality of our product.

Ministry of Transport MalaysiaBlock D5, Parcel D, Federal Government Administrative Centre, 62616 Putrajaya,Malaysia.- Help to identifying and monitoring legal issues, service and safety standards.- Advise in determining the pricing policy.- Monitoring of policies and concessionaire / government linked companies.-Providing Licensing Services to our company : a.Service provider licenses and concessionaires

b.Individual vehicle licenses - private cars, business, pilot for aviation and maritime and others.

c. Domestic Shipping Licenses.

6.0 FINANCIAL PLANThe financial planning is a vital in a starts-up business because it could bring benefit such profitable and long term advantages. Thus, our company will take this as a challenge and has come out with some planning for the future such:i. To determine the size of investmentii. To identify and propose suitable sources of financeiii. To ensure that the initial capital is sufficientiv. To analyze the viability of the project before actual investment is committed v. To guide project implementation A financial plan covers all financial data that derived from the operating budgets such marketing, production or operations and organization or administration budgets. The financial information from the operating budgets is then transformed into a financial budget. 6.1 Start-Up CostThe start-up cost is an initial investment into the business that might be includes one-time start-up costs such as research and development cost, incorporation costs, rental and utilities deposits, fixtures and equipment, and renovation. Besides that, it also can be determine as an initial working capital such inventory, rent, utility, advertising and office supplies)

Types of fixed assetsEstimated cost (RM)Estimated Economic Life(years)

Administrative/Organisation Land & Building Office Furniture/Equipment Office Renovation Transportation250,00075,000100,000150,0005555

Sales/Marketing Advertising50,0005

Operations/Technical Machinery Factory Renovation Pattern Tax500,000200,00010,000555

Total1,335,000

6.2 Working CapitalThe initial working capital is required at the time to starts of business. These are the promotion expenses incurred at the earliest stage of formation of the company which is including the incorporation fees such office expenses, attorneys fees and other preliminary expenses.Working Capital (Monthly)Costs (RM)

Pre-Operating and Incorporation Cost (one-off) Development Cost Business Incorporation costs Deposit (rent and utilities) Other Pre-operating and Incorporation costs25,00020,00040,0003,500

Sales and Marketing Costs (monthly) Delivery expenses Advertising2,0001,670

General and Administrative Costs (monthly) Salaries, wages, EPF and SOCSO Building Rent Office utilities Office supplies Insurance Office maintenance 12,0004,5001,5001,5001,5001,000

Operations and Technical Costs (monthly) Purchase of raw material/goods Carriage Inwards Salaries, Wages, EPF and SOCSO Factory maintenance Factory utilities50,0005,53023,0004,0005,500

Other Expenditure (annually) Insurance Road Tax2,000500

Total Pre-Operations and Working Capital Expenditure204,700

6.3 Start-Up Capital and Financial

The external sources of finance are important that derived from commercial banks, institutes of finance and government agencies which come in the form of term loans, hire purchase and grants. The total amount of funds that have been sourced should be equal or higher than the total project implementation that been calculated before. This effective way is important in order to ensure that the project is fully funded and to avoid the risks under financing laws. Capital ExpenditureCost (RM)Sources of Financing

Land and Building250,000Hire-purchase

Office Furniture and Equipment75,000Cash

Office Renovation100,000Loan

Transportation150,000Existing asset

Advertising50,000Loan

Machinery500,000Hire-purchase

Factory renovation200,000Loan

Pattern tax10,000Cash

Working Capital for 3 months

Sales & Marketing Costs11,010Cash

General & Administrative Cost66,000Cash

Operations & Technical Costs264,090Cash

Pre-operating & Incorporation Costs (one-off)88,500Cash

Other Expenditure (annually)2,500Cash

Provision for contingencies 10%176,460Cash

Total1,943,560

Sources of Project Financing Total Cost (RM)

Own contributions Cash Existing Assets429,470150,000

Loan614,090

Hire Purchase 750,000

Total1,943,560

Proposed Terms of Loan Interest rate with 4% Loan tenure (years) =3Proposed Term of Hire-Purchase Interest Rate with 4% Tenure (years) = 5

6.3 Cash Flow Statement Pro forma cash flow statement is the projected statement of cash inflow and outflow through the planning duration. Under the normal implementation, the pro forma cash flow statement is prepare for the next three or five consecutive years. However, when taking a longer period estimation, sometimes it needs depending upon the project undertaken.

SummaryTotal Cash InflowsTotal Cash OutflowsEnding Balance

20133,043,5602,319,294724,266

20143,833,3332,214,8692,342,730

20157,499,9992,956,0366,886,693

201614,833,3314,089,37617,630,648

201729,499,9957,029,03040,101,612

graph 1

Costs(RM)Pre-Operations20132014201520162017

Total cash Inflow1,043,5603,043,5603,833,3337,499,99914,833,33129,499,995

Total Cash Outflow523,5002,319,2942,214,8692,956,0364,089,3767,029,030

Cash Surplus (Deficit)520,060724,2661,618,4644,543,96310,743,95522,470,965

Beginning Cash Balance0724,2662,342,7306,886,69317,630,648

Ending Cash Balance520,060724,2662,342,7306,886,69317,630,64840,101,612

6.5 Income Statement The income statement shows the expected profit or loss for the planned period. Usually the pro forma income statement consists of sales, gross income and net income before tax.Sales - Cost of Sales = Gross ProfitGross Profit - Operating Expenses = Net Income before taxNet Income Before Tax

2013RM313,036

2014RM2,195,069

2015RM5,862,173

2016RM13,196,193

2017RM27,854,956

6.5 Balance Sheet

The pro forma balance sheet shows the financial performance of the business for the planned period and the financial position of the business at a specific point in time in terms of assets owned and how those assets are financed.Assets are the economic resources of a business that are expected to be of benefit in the future. Owners equity refers to capital contributions from the owners or shareholders in terms of cash or assets plus the accumulated amount of net income. However, if the business suffers a loss, the amount of loss will be deducted from the capital contributions.

Liabilities are the amounts owed by the business to outsiders. Current liabilities refer to the short-term obligations of the business that mature within a period of less than a year. The most common forms of current liabilities are accounts payable and accrued paymentsAssets = Owners equity + LiabilitiesYearsAssets (RM)Liabilities (RM)

2013RM1,882,266RM1,052,367

2014RM3,283,730RM697,775

2015RM7,610,693RM335,000

2016RM18,137,648RM305,000

2017RM40,391,612RM275,000

2

7.0 PROJECT MILESTONESMonthJan.Feb.Mar.Apr.MayJuneJulyAug.Sept.Oct.Nov.Dec.

Activities201220122012201220122012201220122012201220122012

1. Incorporation of

the venture

2. Completion of

design and development

3. Completion of

prototypes

4. Obtaining of sales

representatives

5. Signing of distributors

and dealer

6. Ordering of materials

in production quantities

7. Starting of production

or operations

8. Receipt of first

orders

9. Delivery of first

sales

There are seven activities that our company need to do that starting from incorporation of the venture until a delivery of first sales. Based on our project milestone we expected to finish our team management team structure in February 2012 that takes about 2 month. It is important to ensure our team know all their responsibility to this company.Completion of design development and completion of prototypes is a major part for this company because of our engineer need to design and testing our main product to ensure the quality and safety before proceed to the production line and we expected to finish it at July 2012.We sign the contract with distributors and dealers on August that important to ensure the delivery of our p, and yet we start to order the materials in production quantities on September. Hence forward, in October and November, we start our production and operations of the product. We will start to receipt of our first order in November and then in December the first sales of our product were started to be delivered to customers.

8.0 CONCLUSIONAs a conclusion based on details about our product, it can be concluded that the 3 in1 vacuum cleaner have a high potential to be sell all around a world because of their great features, functions and can be apply at the various area. This product consists three mode that differ from the common vacuum that is a suction, blower and odour mode. Our target market is a housewife because of the person that always faces with a dirt at home and vehicle. This product had been design to help the community to solve a dust and water problems inside vehicle and at home. Besides that, the financial management had made a prediction that company will get a higher internal rate of return (IRR) about 121%. It is a theoretical proven that our company have a great opportunities to success in this field.

9.0 Appendices