U5 IP Memo

Top Notch baggage management and trucking is a Nairobi based company that aims at becoming the largest trucking company within Kenya. Top Notch is focusing on the perishable goods industry at the initial stages with future plans of diversification and serve new industries. Venturing in perishable goods industry is due growth expectations that encourage. Besides the stable nature of the industry presents an all-round season market that gives Top Notch an advantage in generating stable ever-growing profit margins.

3. Company Summary

3.1. Services

Top Notch will offer both hiring services as well as private hauling and carrier services. Most of the business operations will be derived and based on primary producers and manufacturers of perishable goods that require quick delivery to the market. Both wide load and miniature load services will be provided by the company. The food industry is the major target in the business since purchasing variables in the industry are based on customer service, referrals programmes as well as historical reputations.

3.2. Market Segments

Top Notch will primarily focus on serving four customer and market segments. The food industry will be given the first priority. This is because of the growth and versatility within the industry. Besides, the food industry presents an annual growth rate of about 4% with about 4000 customers with higher purchasing potential being identified per month. The subsequent segment is the horticulture industry that has a promising market with the advent of modern irrigation techniques. The industry has an estimated growth capability of 3% with some average of 1500 potential customers annually. The retail industry is another potential segment that presents complexity due to variation in customer base. The industry has an estimated growth rate of about 3%, however, the rate varies in accordance o weather conditions, regional imbalance and other associated difficulties within the business locality. Therefore, the industry boasts of 2000 potential customers per year. Finally, the peripheral segment that aims at catching up with any emergency or urgent customers has an average growth rate of 2% with the chances of growth increasing with change in geographical location with respect to the mode and means of transport. Such a segment has a customer base estimate of about 500 customers.

3.3. Management

Top Notch will be led by Jonas Mikes a 10-years transport and logistic industry veteran who boasts of various successful projects across the country. During internship after college education, Jonas Worked as a driver for Buzeki Haulers and Logistics for two years. Due to need for diversity, Jonas moved into the field of management for two years. Having acquired a significant amount of skills, Jonas moved to Rongai freight trucking limited. At Rongai, he was tasked with managing the south rift wing. After three years, he was instituted as the project manager of the company where he flagged off the establishment of five logistics projects in north and two projects at Busia’s Kenya Uganda Boarder as a linkage for foreign partnership with Tororo cement factory and other freight company’s such as Kampala Freighters and Jinja Import and export limited. Owing to such Historical supply chain and logistics management, he therefore opted for a solely owned baggage management and trucking business company.

3.4. Marketing

For effective marketing, there will be three unique marketing techniques aimed at creating awareness about the company as well as generation of new customers across the country. The core strategy for such programs is conducting of promotions. The focus will be on press release as well as advertisement through use of multiple media. The subsequent efforts will lie in utilization of incentives which will be mainly offered to existing and persistent customers. One of the final efforts in acquisition of customers will be by use of print outs of various media such as brochures. Distribution of brochures will be done through customer outlets as well as fitting some of the brochures of freight and baggage vehicles.

Since to Notch is entirely customer centred aiming at becoming a lead baggage company in the whole of Kenya, profitability will be estimated within the first three months after establishment and successful launching. The projection for year one is 10 million and 40 million for year three.

3.5. Mission Statement

The mission of Top Notch baggage management and trucking company is to become a lead company serving Kenya’s Perishable Goods industry.

3.6. Environment

Top Notch company is a Rift valley-based company with its headquarters in Naivasha. Other principal offices for the company are located in Kitale, Eldoret Nakuru and Nairobi. Jonas Mike is the President, Chief Executive officer (CEO), and also the major shareholder. Jonas Mike has been a management pioneer in logistics and transport companies across Kenya for 10 years.

3.7. History of the Company

The company has been in existence for one year. During the one-year tenure, the company has managed to maintain financial stability as a result of extensive knowledge and skills based on industrial experience of the managerial team.

4. Services

The baggage management and trucking sector provides transport services for individuals and companies that look for hauling heavy baggage. The Top-Notch baggage services enables individuals lease trucks of any given size for a project that requires hauling. The services will be provided on a large scale across the country. However, plans for expansion outside the boarders will depend upon the successful operation in the selected regions of Kenya within the first five years.

The service provision activities will be provided in two bases; for hiring and as private carriage. The wide load and miniature load truck segments will be the basis of formulating various prices for the services offered. Target markets as well as detailed services provision is discussed in the succeeding sections.

4.1. Market Analysis

Given the opportunity to exploit the market within the transport sector, Top notch will mainly focus on perishable goods in order to be in a competitive position. The experience possessed by the management personnel within the company. Therefore, there is efficiency in servicing clients since there is an ever-growing demand for highly reliable and effective transport solutions under the logistics and transport sector.

4.2. Market Breakdown

There are several sectors to be served by the transportation services to be initiated by the company. The primary sectors and customer breakdown includes the food industry, horticulture produce, retailers and emergency services. For efficiency market ventures will be based on available data on the current market share for each segment especially within Naivasha and Nairobi which are currently under exploitation.

A huge number of enthusiasts within the field of transport have exploited the market as well with their own fleets. On the other hand, smaller counter-parts outsource services for the transport function. The latter have much variations in their operations. Nevertheless, they boast of some sort of stable and steady demand due to highly reliable services and transport solutions they offer. It is therefore upon our efforts that we have plans of soliciting their customer hood.

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4.3. Market Strategy

Top-Notch will primarily focus the marketing capital to selected industrial niches. The narrowing down is a directive measure in concentrating efforts to the segments to strengthen the company at its early maturity stage. Besides, a narrow market segment will help the company in developing and building on the existing reputation in provision of highly reliable transport services. Such focus will be a milestone achievement in acquisition of referrals by friends and loyalties of the company.

On the other hand, the food industry is made up of companies with varying requirements. Since Top-Notch has gained necessary skills and knowledge in serving them, there is valuable experience for serving such customers. The company and its management have faith in increasing the fleet in order to capture extra clients and offer better services to the available clients.

4.4. Services Analysis

4.4.1. Market Description: Trucking

The establishment is majorly based on over the road transport services together with storage for some goods. trucked goods held usually weigh more than 101 pounds. The principle operations are based on external shipment to other towns designated as destinations by customers. Suburban areas are no exception when it comes to delivery and pic-up of goods as well.

Estimated Number of Kenyan establishments	200
Employees	2,000
Annual Sales	$2 million
Employees for each establishment	20 employees
Average sales for each establishment	$10,000

4.4.2. Industry Trends

With the ever-growing shortage of truck drivers, the company seeks to adapt to the changes in the market environment in order to maximize on its growth and associated opportunities. The intermodal transporters also have a chance of benefitting from such trends. Therefore, Top-Notch will utilize modern technology in fleet management and inventory management to have a larger market share among all the carriers.

Baggage management involving warehousing and logistics have a lesser market share. Therefore, trucking is the main venture that acts as a linkage to both warehousing and associated logistics. It is thus outright that transportation services earn more than warehousing unless the companies associated impress self-owned transport systems.

4.4.3. Competition and Purchasing Patterns

The transport sector is much fragmented despite having key players. There are many companies offering freight and trucking services. The competitors for Top Notch are companies of similar ranks majoring in similar market segments. The top of all competitors are the companies associated with Food processing transport services. Such companies pose much competition. However most of them are based in the coastal region where they mainly ferry imports from the port. Companies with comparable fleets are few as well hence a competitive advantage.

According to studies, customers within the food industry are much sensitive with prices with much higher value put on timely delivery, unique handling enhancements and just below maximum truck capacity orders. The customer affiliates as well as carrier’s positive reputation play a key role by having strong influence for purchasing decisions.

4.4.4. Risks and Contingencies Associated with Finance

There is recognition of subjection to both market as well as industrial risks. The main risks for the company include:

· Industrial High Concentration Risk. Since the company operates within the favourable field, there is high chances of new entrants in the industry. Therefore, any sluggish operations and low turn outs especially in the food processing firms may negatively influence the profitability of the company. For mitigations, the company is aiming at diversity in trucking in that, other industries will be included in the business as well.

· Operation Risks. There is recognition of inherent problems and threats in baggage transport. Any baggage damages may result in undermining the profits of the company. For reduction of such risks all the insurance policies have been maintained to alleviate any issues arising due to cargo damages.

4.5. Business Counterparts and Participants

4.5.1. Trucking

The field is majorly exploited by coastal populations especially around the exporting and importing ports. Therefore, the mainland business operations are left to individual companies which strive to acquire the best services from nearby companies. However, some companies are not Luck enough and they therefore sought for individually owned trucks which present higher costs to the company in terms of maintenance and payment of the employees who are mainly drivers and mechanics.

Air transport and rail transport are efficient. However, both of them are inaccessible and pose challenges of high handling costs with no provision of special facilities for perishable goods. due to such reasons, trucking services are there to provide linkage between air and road transport as well as rail to road transport services. Mashallah and Buzeki offer public trucking services for most industries.

4.5.2. Private Haulers

They comprise a large percentage of the motor vehicle operations industry. There services thus seem to be over-rated based on the assumptions that they are partially a monopoly. However, they offer a higher amount of revenue to the government since they take part in the business steadily with no breakdowns and failures. Shree haulers are private haulers but mainly deal with the products associated with their chain of companies across the countries of East Africa.

4.5.3. For Higher Carriers

They offer their trucks to companies at a fee. Nevertheless, there service provision is much profitable but also cumbersome due to complexity in management of fleets given out to perform operations for individuals whose whereabouts are not well known. Overloads and damage to trucks is common within the provision for such services. One of the major hirers are the Rongai Haulers.

5. Strategy and Implementation

Strategies of operation are embedded in timely delivery, competitive price formulation mechanisms and utilization of highly qualified drivers. Besides, the Top-Notch aims at running independently with no traceable imprints of contractual business. It means that the company will be able to run on its own from hiring to sourcing. Trucks for the company will range from 200ft containers to minivans. At this stage the company will be sufficiently self-reliant and thus all operations are deemed to run smoothly once all strategies are effectively spelled out.

The primary components of the latter strategy can be summed up as follows;

· Expansion of the fleet of trucks. Top Notch is currently engaged in expanding the existing fleet. The act will allow for expansion and increase in number of customers to be served.

· Establishment of independent reputation and status. Due to operation as a sharing, the company is intensively working on plans of acquiring a fully owned trucking service provision system especially in the long-range haul operations. already, a reliable truck dealer has been established and therefore, everything will be initiated once all the resources and other necessary requirements are pooled together. The company will therefore, be able to serve clients out of its domain once the resources and operational tools are fully established.

5.1. Value in Top-Notch

Top Notch offers the following advantages over other companies;

· High quality Services. We offer clients prompt, reliable, courteous and value-added services. The company already has a reputation for punctuality in delivery as well as highly rated drivers in the industry. Therefore, building on the reputation is the only requirement as of now.

· Highly competitive and incomparable rates. We will offer the clients such rates due to the low inputs as well as minimal start-up capital.

· Unique package handling mechanisms. Already safety equipment which are highly dependable are being serviced in preparation for the operations ahead. Other equipment will be provided as a way of stabilizing baggage handling procedures. Therefore, customers have up to 99.9% safety of their cargo and miniature baggage as well.

5.2. Competitive Edge

The core strength of the company lies in a wide industrial experience with a concrete reputation base on the owner Jonas Mikes. The company is as well known among the customers for offering high quality customer service in the customer care and services unit within the company.

5.3. Marketing Strategy

Our services are offered as solutions to several companies in the target market segments. Such segments need quick, safe and high-quality handling and delivery of perishables. The Plans are aimed at international market ventures and hauling of any type of baggage, the following are the fundamentals of marketing plan:

5.3.1. Marketing responsibilities.

There will be an extensive promotion-based campaign. Two effective goals must be accomplished within the promotional campaigns.

· Attraction of quality customers and service persons.

· Attraction of constant and consistent customers who need hauling services.

5.3.2. Promotion.

· Radio broadcasts, TV shows, newspapers as well as magazines.

· Billboards as well as brochures

5.3.3. Incentives.

Incentives will be given through customers. Top Notch will be the label on mugs, pens, caps, T-shirts and other advertising equipment.

5.4. Sales Strategy

There will be part time sales personnel who will work in far off places for the purposes of making the company known to almost all Kenyans of all ranks. According to customer sample survey, customers have interest in new enhanced services to be provided by our company. Therefore, the company seeks to identify a customer base specifically with special orders that require more attention during transit. Thus, new trucks featuring advanced equipment such as high class long term refrigerators will be acquired to facilitate the necessary processes.

6. Management

For reduction of overhead, the company’s management is minimized. All the executive decisions are made by Jonas Mikes the CEO and the president of the company. Most of the sales leads are also generated by him. Now Liz Dennis works as the executive secretary. She is responsible for answering inquiry calls as well as maintenance of the customer database.

6.1. Organizational Structure

The management philosophy is based on personal responsibility as well as mutual respect. Such philosophy maintains and stimulates achievement and productivity with emphasis on customer-oriented service as well as for fellow employees. therefore, the overall structure is linear having all responsibilities for decision making thrust unto the staff.

7. Financial Plan

To meet the minimum requirements for the business, the company will raise $100,000 for purchasing of equipment to be at bar with the needs of the industry. An increase in fleet will be of importance in the efforts of widening the market base as well as growth in sales.

7.1. General Assumptions

Year	Year	2018	2019
Plan Month	1	2	3
prevailing interest Rate	10.00%	10.00%	10.00%
Long-term Interest Rates	10.00%	10.00%	10.00%
Tax Rates	25.42%	25.00%	25.42%
Others	0	0	0

7.2. Break Even

The break-even is indicated in the table below

BREAK-EVEN
Per month Revenue Break-even	$6,206
Assumptions:
Average variable cost (%)	20%
Fixed Monthly cost	$4,965

7.3. Pro forma Cash Flow

	2018	2019	2020
cash received
cash from operations
cash sales	$40,000	$100,000	$160,000
cash from receivables	$26,067	$44,100	$74,100
Sub total	$66,067	$144,100	$234,100
Additional Cash Rewards
Additional cash received
sales tax and VAT	$0	$0	$0
current borrowing	$0	$0	$0
Other liabilities	$0	$0	$0
New Liability	$100,000	$0	$0
current assets	$0	$0	$0
long term assets	$0	$0	$0
investments received	$0	$0	$0
Sub Total Received	$166,067	$144,100	$234,100
Expenditures
expenditures from operations
Spending cash	$15,000	$25,000	$45,000
bill payments	$290,000	$56,000	$90,535
Sub Total spent	$305,000	$81,000	$135,535
additional expenditure
pay outs	$0	$0	$0
borrowing repayment	$1,800	$3,500	$2,500
other liabilities	$0	$0	$0
long term liabilities repayment	$5,500	$4,000	$4,000
purchase of other assets	$0	$0	$0
long term assets purchase	$62,500	$0	$0
dividends	$0	$0	$0
Subtotal	$69,800	$7,500	$6,500

7.4. Balance Sheet

The table below shows the trucking balance sheet for 2018 to 2020

	2018	2019	2020
Assets
current assets
cash	$2,200	$31,000	$32,000
accounts receivable	$1,900	$4,500	$7,500
other current assets	$0	$0	$0
SUB TOTAL ASSETS	$4,100	$35,500	$39,500
long-term assets
long term assets	$80,000	$80,000	$80,000
accumulated depreciation	$4,400	$6,500	$9,500
TOTAL LONGTERM ASSETS	$75,600	$73,500	$70,500
TOTAL ASSETS	$79,700	$109,000	$110,000
liabilities and capital
current liabilities
accounts payable	$2,800	$5,000	$7,500
current borrowing	$8,000	$4,700	$2,200
other current liabilities	$250	$250	$250
SUB TOTAL CURRENT LIABILITIES	$11,050	$9,950	$9,950
long term liabilities	$69,000	$65,000	$56,000
TOTAL LIABILITIES	$80,050	$74,950	$65,950
Paid in Capital	$0	$0	$0
retained gains	$1,200	$1,500	$35,000
earnings	$3,000	$35,000	$50,000
TOTAL CAPITAL	$4,200	$36,500	$85,000
TOTAL CAPITAL AND LIABILITIES	$84,250	$111,450	$150,950
Net worth	$4,200	$36,500	$85,000

Note;

The long term projected cash flow in the amounts of $100,000 will be received in May of 2018 thus it is reflected in the increment of the lengthy borrowing for the month. The company will purchase the first two trucks in June and July. such expenditures are included in the projected cash flow.

8. References

CHIRCHIR, M. M. K. (2016). LOGISTICS OUTSOURCING AND PERFORMANCE OF HORTICULTURAL FIRMS IN NAIROBI COUNTY (Doctoral dissertation, DEPARTMENT OF MANAGEMENT SCIENCE, SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI).

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Hertz, S., & Alfred son, M. (2003). Strategic development of third party logistics providers. Industrial marketing management, 32(2), 139-149.

Huang, G., Xu, X., Song, H., & Lim, H. (2018). Analysis on the Development of International Freight Forwarding Company-Taking Changbao International Freight Forwarding (Shanghai) Co., Ltd as an Example. GLOBAL FINANCE REVIEW, 1(1).

KANJA, D. W. (2017). INFLUENCE OF LOGISTICS MANAGEMENT ON SUPPLY CHAIN PERFORMANCE IN RETAIL CHAIN STORES IN KENYA: A CASE OF NAKUMATT HOLDINGS LIMTED. Strategic Journal of Business & Change Management, 4(2).

Nowakowska, M. (2015). Safety of Supply Chain of Kenya’s Cut Flower Industry. Case of Kongoni River Farm. Logistics and Transport, 26(2), 43-48.

9. Appendices

9.1.1. Projected Profit and Loss

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