BUSINESS PLAN OF PAINT:
The focus of Paint Company is to provide high-quality surface preparation, finished
painting, and refinishing services to residential, commercial, municipal building, and
facilities clients primarily in the most-populated area within the tri-county
communities defined as Wayne, Oakland, and Washtenaw counties.
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INTRODUCTION
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MISSION & PRINCIPLES
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BUSINESS OBJECTIVE
RAW MATERIALS
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FOREIGN INVESTMENT
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DEMAND
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EXPORTS
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TYPE OF PAINTS
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SERVICES AND DESCRIPTION
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TYPE OF PAINTS
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PACKING
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DISTRIBUTION/ PLACEMENT
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PROMOTION
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MARKET SEGMENTATION
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GROWTH, MARKET, & CLIENTS WE SERVE
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COMPETITION & MARKET POSITION
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MARKETING STRATEGY
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KEY PARTNERS
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LEGAL CONSIDERATIONS
INTRODUCTION
Local paint industry operates both in organised and unorganised sectors.
The data regarding production and number of units of the unorganised
sector is not available, therefore, it is difficult to have complete data about
the production and number of units of the paint industry. According to an
estimate, over 350 units of paints and varnishes are operating in the
unorganised sector. Their products are substandard though their cost of
production is comparatively low. Many of them also avoid payments of
excise duties and therefore, are in a better position to compete in the local
market.
Tale-V depicts that the production of paints and varnishes has been erratic
during 1990-91 to 1997-98. The tip in production may be attributed to the
shortage of raw materials, contraction in demand for certain paints due to
slump in paint consuming sectors and low level of efficiency etc. The
production of paints has been reduced to half in 1997-98 as compared to
1990-91. During the same period varnishes have also registered a declining
trend.
To start a paint factory all one needs an excise licence and perhaps one or
two mixers. The government tolerated this for a long time as a concession
to small industry, but the situation was abused until 1992 when the
government developed a new policy to prevent tax evasion. Information
was obtained about all the excise-licence holders manufacturing paint in
Pakistan and a survey was conducted to ascertain what each unit expected
to pay. But even then it got no cooperation from factory owners, and so the
government established a fixed rate of tax, possibly with the assistance of
the small manufacturers. No one was concerned at that time as to whether
or not the figure was fair.
y these companies. The implications are clear:
MISSION & PRINCIPLES
Painting will be known for providing a high-quality service product. We
will become known as a premium provider of custom and commercial
painting and finishing services, operating at multiple levels within our
prospect and existing client community.
To achieve our mission, Paint will have to succeed at doing the following:
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Provide unique, practical, and professional services to our clients on a
timely basis, applying and leveraging time-tested, and state-of-the-art
techniques and practices. To succeed at meeting our goals, our first
responsibility is to our customers.
Maintain a strong financial environment to allow us to establish
ourselves as a multifaceted service provider in the regional market we
serve.
Behave with the philosophy that our customers are entitled to a
professional service that performs to above expectation satisfaction,
in a reasonable, agreed-to amount of time and at a competitive,
attractive price.
Treat our partners, employees, and customers with fairness and
consideration.
Bring value to our business operations community and client
community.
We expect that through the effective application of these philosophies and
principles we will succeed in achieving our mission.
GROWTH, MARKET, & CLIENTS WE SERVE
Market factors have indicated a current trend of moderately increasing
income and commercial budgets with a pent-up demand for convenience
and beautification services. It will not be unreasonable for the number of
potential residential and commercial customers to increase 10 to 30
percent each year.
Market and Prospect Client Base
Who: Ko-Bas Painting Company serves a marketplace made up of
commercial and residential clients. Our ongoing focus is to develop and
serve the correct blend of work to ensure ongoing revenue requirements.
Our market focus is typically made up of an even split of residential and
commercial clients. Our commercial clients are made up of municipal
buildings, school buildings, and private businesses (manufacturing and/or
retail).
Where and Why
We choose our clients in this market to ensure that we do not extend our
operations beyond reasonable areas of service, primarily, to manage and
moderate costs in drive time, customer follow-up servicing, quoting, and
inspections.
BUSINESS OBJECTIVE
Grow the company to a targeted achievement of more than 15 to 20 percent
operating margin year-to-year.
We've maintained an objective view and take a conservative approach in
developing and attempting to achieve our business goals. The financial data
and business model provided is based on a year-to year running operational
and growth plan that is developed on an as-needed basis, typically by
quarterly review. Thus, the numbers provided are based on a blend of real
and approximated costs using the most conservative expense expectations
available (and are based on our considerable experience).
Raw Material
Paint industry uses about 300 different types of raw materials for
producing various kinds of paints. About 15 per cent raw materials of the
industry are petroleum based. In 1971 between 80 to 90 per cent
requirements of the materials were met through imports which currently
have been reduced to about 40 per cent due to increased production of
indigenous raw materials. The major imported raw materials include
pigments, zinc oxide and titanium oxide. Most of raw materials is available
locally. At times raw materials are imported in large quantities compared
with their demand which affects quantity of imports.
The imports of major raw materials of paint industry are shown in the
Table-V. The major raw materials produced locally include mineral
turpentine, resins, vegetable resins, red and yellow and gums. The,
availability of indigenous raw materials has gradually been increasing and
in a few items the country has attained self sufficiency. For instance, marine
blue is produced in a large quantity that it allows even some exports. The
reduction in imports of various raw materials is due to enhanced
production of these in the country. As mentioned earlier, since about 15 per
cent raw materials of the paint industry are petroleum based, with the
rising production petroleum at home, the availability of raw materials also
increases. The development of chemical industry will further ease the
supply of raw materials and will cut its import. The future prospects to
increase local production of raw material for paint industry are quite bright.
Projects for the manufacture of Titanium Dioxide and Lithopone have
started pro duction already.
FOREIGN INVESTMENT
Foreign companies in Pakistan's paint industry have been fairly active. In
fact quite a few of the leading paints manufacturing units were sponsored
by foreign manufacturers and are operated in collaboration with local
entrepreneurs. Two of these foreign-sponsored paints manufacturing
enterprises are public limited companies whose shares, after being offered
for public subscription, are quoted on the local stock exchange. The interest
of foreign investors in this industry appears to be due to the fact that most
of these companies began their operations in Pakistan as importers and
traders of paints which were manufactured by their principals in the home
country. After the imposition of restriction on the import of paints, through
high tariff barrier, these companies have established their own factories
and are manufacturing their well-known brands. Foreign investment in
paints industry was estimated to be in the vicinity of Rs. 10 million.
Some of the local paint manufacturing enterprises have also established
paint manufacturing factories in the Middle East countries in collaboration
with the host country's investors. Such joint ventures by Pakistani sponsors
are reported to have been established in Kuwait, Afghanistan and Lebanon
while more such opportunities are being explored in Saudi Arabia, Iran and
other countries of the Gulf.
DEMAND
The main consumers of paints and varnishes are Government and semigovernment organisations such as Defence Service, Shipyard, Railways.
WAPDA, Tarbela Dam; Government Road Transport Agencies etc. The
private housing sector is estimated to account for 20 per cent of total paint
consumption in the country.
The demand for paints and varnished is derived from expansion in
construction, building, manufacturing, transport and other sectors. The
country has yet to go a long way in its development efforts, for the pursuit
of which a five year plans have been formulated Moreover, a favourable
turn in the investment outlook in the private sector, brought about by a
desired change in the industrial and economic policies of the Government,
is expected to contribute to a pick-up in the private industrial sector. In
view of this, there appears to exist a sizeable potential for further strides in
the country's paints industry.
The demand for paints in conservatively estimated to increase by 20 per
cent annually during the next five years. Moreover, the development of
chemical industry is also taking place and in view of this, most of the raw
materials used by the paints industry, are expected to be produced and
manufactured locally during the next five years. The paint industry would
thus find a favourable raw material for further expansion and growth.
EXPORTS
Pakistan's export performance in regard to paint and varnishes is not very
encouraging. In terms of value exports touched the highest in 199798 at Rs.
122,907 million. As compared to this exports touched the lowest at
Rs.5.665 million 1989-90 as illustrated in the following table-III.
Major exports of paints and varnishes include colours prepared, enamels,
paints oil, paints prepared, pigments and varnishes. In term of value, the
average share of these items in total exports of paints and varnishes was
about 86 per cent during the last five years.
Pakistan exports paints and varnishes to a number of countries, prominent
amongst them being Saudi Arabia, Japan, UAE, Dubai, Bangladesh, Iran,
Singapore, Sri Lanka and Oman. Export prospects of paints and varnishes
is not much bright under the present conditions. Pakistan exports mainly
conventional type of paints mainly to Middle Eastern countries. In Middle
Eastern market, Pakistan faces tough competition with the products of the
Western countries which enjoy an upper edge as their cost of production is
relatively low. Secondly, their products are well established and Pakistan
has joined their rank with a few type of paints. Thirdly, a large number of
foreign companies are operating in these markets in different sectors of the
economy which prefer the products of their own countries, if available.
To increase exports, it will be necessary that a number of other products
should be developed which have a potential market abroad. Secondly,
Pakistan has to diversify its market. Currently Middle Eastern countries are
in process of establishing different type of industries including paint
industry, therefore, dependence of these countries for exports will not be
much useful.
Paint's exporters also need incentives as provided by the Government to
other industries. Multiple taxation system is a hurdle in the development of
exports. This has increased the prices of paints in international market and
Pakistani exporters face difficulties in competing with other countries.
SERVICES
Paint offers comprehensive interior and exterior painting services for both
the residential and commercial markets.
DESCRIPTION
Paint services include:
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Full prep work.
Dry wall contouring.
Fine detailing.
Small carpentry work.
Specialty wall coatings.
Refinishings.
Acoustical ceilings.
Pressure washing/roof cleaning.
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TYPES OF PAINTS
Paints are made to serve hundreds of specific purposes and in view of this,
they are classified into innumerable types. For instance, the paints which
serve the purpose of protecting the surface of any article may be made to
resist acidity, moisture, heat etc. Similarly, decorative paints may be of
several types, some of which may give luminous effects and some types may
give simple effects of different colours. However, paints are broadly
classified into three main types viz (i) Primers (ii) Undercoaters and
(iii) finishing paints.
These types are exclusive of water thinned materials such as distempers or
emulsion paints. Within the aforesaid three categories, some of the paints
may be described in brief as under
1) Resisting Enamels:
These paints give resistance to acidic atmosphere and environmental
conditions. These are made with pigments and media. Synthetic resins are
used in the media.
2) Aluminium Paints
In the manufacture of this type of paint, the basic pigment, e.g. white lead,
zinc oxide is replaced by aluminium powder. The outstanding quality of an
aluminium paint is to give resistance to moisture and heat. Such paints are
made with a variety of media depending on the specific purpose it is
intended to serve. Head-tested oils, varnishes (either natural resin or
synthetic resin), cellulose lacquers, chlorinated rubber and spirit varnishes
are among the materials which are used to manufacture this type of paint.
The important consideration however is that what is employed as media
should be low in acid value.
3) Anti-Corrosive Paints
: Special paints are made for use in ships to counter - act corrosive effects at
the bottom of the ship. These are manufactured by incorporating toxic
ingredients, e.g. oxides of mercury, which have quick drying properties.
Bitumen Emulsion Paints: The paint is made like the ones which are oil bound and thinned in water. After application, the water evaporates and
the surface, which is painted, is left with a film of bitumen and pigment.
4) Bitumenous Paints:
These are generally of dark shades due to the fact that the basic ingredient
is bitumen, the property of which is difficult to conceal. It is prepared by
mixing bitumen in driving oil.
5) Fire - Retrading
Paints: Such paints are generally used to protect wood material if exposed
to fire. If the wood materials are painted with fire retarding paints, the fire
is not likely to spread quickly although a greater intensity of fire may
destroy and consume paints to the extent, of the degree of thickness of
coatings and the nature of paint.
6) Fungicidal Paints:
Several types of paints are manufactured to resist the growth of fungus.
Such paints incorporated agents, which are toxic.
7) Heat - Resisting Paints
By using pigments which stable at high temperatures combined with shortoil synthetic resin media (Melamine resins), paints are made to stand
temperature up to 350 degree Fahrenheit or even more without any change.
8) Hydro-Additive Paints:
These paints may be successfully applied to damp surfaces where ordinary
paints fail to work: These are available in the form of primers, under
coatings and finishes in which suitable substances are added to develop the
properties for adhering to damp surfaces.
9) Luminous Paints
The luminous paints which are generally used for decorative purposes are
divided into two types viz phosphorescent and fluorescent.
10) Machine Paints:
These are enamels specially formulated for use on machines and tools.
These are available for use by brush and also for spraying.
11) Metallic Paints:
These types of paints are heat-resistant and are generally used to paint
radiators and heating pipes. These are made of aluminium and bronze
powders, which are treated in oil or varnish, synthetic resin or cellulose.
The colours of these paints are generally pale gold to dark bronze.
12) Wet-on-Wet Paints:
These paints are made with specially treated oils so that coats can be
applied at short intervals of about 30 minutes to one hour. They are
intended mainly for spray application.
13) Wood Preservation:
These paints are classified into three types: (i) Creosote and coaltar
derivatives, (ii) organic solvent types and (iii) water solution types.
14) Glue:
Glue in the crude form of gelatin, prepared by boiling animal bones,
clippings of hides, skins, horns etc. The main use of glue in the paint
industry is in the preparation of washable water paints.
Paint Removers: These are products, which if applied, soften the paint or
varnish so that it could be removed easily with a knife. The two main types
are Alkaline Removers and Spirituous Remover.
PACKING
Paint has four in packing style.
1) Quarter (0.91 liters) 2) Gallon (4.oo liters) 3) Bucket ( 16.56 liters)
4) Contract pack (20.00 liters)
DISTRIBUTION/ PLACEMENT
Place includes company activities that make the product available to target
consumers.”
Placement is the process in which the final good or service is made available
to the end customer. The channels used for this purpose are known as
“Marketing Channels”. Marketing channels are defined as “set of
independent organization involved in the process of making a product or
service available for the use or consumption by the consumer or business
user.
Every region is headed with Regional Sales Manager and in every Region
there are further Area/Territories. The supply activities are carried
out with keeping the region and areas. One region can not carry out
supply in others region same in the case with areas/ territories. The product
is only delivered to the company approved dealer or distributor. Distributor
can sale to the customer which is not approved dealers of the company.
Main consumption of paint is on dealer /retailers counter. The delivery is
made through 2 modes
1) Distribution Vehicles
2) Freight On Road ( goods transportation service)
By these 2 means the distribution and placement of products to be available
for their customers and consumer
PROMOTION
Before getting a product into the market, culture is to invite its business
partners (dealers/distributors) to give them orientation regarding new
product what ICI is going to launch, with what features and how it will
work. After this f irst step when p rod uc t is introduced to the
business partner’s second step is its promotion how the promotion
is done.
1. T.V Advertisement on different channels
2. Radio Advertisement , F.M 100
3. Bill boards almost in every big city
4. Posters / Banners
5. Small gifts for dealers/distributors to push new product sale
6. Small gifts for painters / contractors who are labor force who apply
paint
7. Painters party to introduce them new product
8. T – Shirts printed with product logo on them
9. Caps
10 .Key chai
SALES FORECAST
See Sales Strategy.
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Sales Forecast
Year 1
Year 2
Year 3
Commercial Buildings
179,0000
315,1300
455,4040
Residential Buildings
157,5000
165,3750
173,6440
336,50000
480,52505
629,0428
Sales
Total Sales
Direct Cost of Sales
Year 1
Year 2
Year 3
Commercial Buildings
40,480
78,783
100,189
Residential Buildings
47,250
52,920
55,566
87,7300
131,703
155,755
Subtotal Direct Cost of Sales
MARKET SEGMENTATION
The paint will focus on two markets within the industry, the residential
segment (including apartment buildings) and the commercial segment
which includes buildings used for professional purposes. The company can
handle any size building that needs its services. It is the goal of the
company to eventually have approximately one-third of all business coming
from the commercial segment, since this generates the greatest cash flow.
Furthermore, this segment has the lowest percentage of variable costs. The
residential segment is considered to be the company's cash cow. Even
during the slow winter months, the company can expect to have a small
number of residential contracts.
Initially the company will focus on the two segments in just the Pakistan,
Lahore area. However, by the end of the three year projections, the
company expects to be serving the entire Punjab
COMPETITION & MARKET POSITION
The competitive environment and the upswing of local and national
economies put us in an enviable position for the last two years in terms of
the demand for convenience services and client custom/commercial
coatings requirements. This created a positive competitive environment, as
there were not enough service providers to satisfy the body of available
work. Needless to say, time changes everything, the economic downswing
as of late has put moderate competitive pressures on the painting services
provider community at large, creating a developing environment of
cutthroat pricing and job leverage.
It is our position that by changing our mix of business, competitive client
pursuit, and pricing practices we have been able to remain competitive and
most importantly growing. Ko-Bas competes on service and price. We
gather market-based information on an ongoing basis and develop our
pricing and cost strategies based on market norms specific to our client
profile and geographic considerations.
Our competitors range from the small independent 1-2 man painting
service for residential and light commercial work to the medium-size 10-20
man commercial-only shops. To find out who to beat and who's getting the
work, we need not look further than the local Yellow Pages and more
importantly, by having those tough discussions with our client prospects
that select another provider and asking them "Why weren't we chosen?"
We have found that dealing with reality and modifying our tactics with
reality has helped us keep an edge when it comes to beating the
competition.
On any given day, in our particular market segment we have to keep an eye
out for an average of 10-15 competitors in our market, particularly in the
commercial and municipal service sector.
MARKETING STRATEGY
Our marketing strategy is simple—use the available channels appropriately
to impact growth, gaining considerable name recognition through word of
mouth. Contracting for painting and finishing services in our commercial
and municipal markets is not an impulse decision, so the primary thrust of
the marketing strategy is to inform our prospective clients of reference
work similar to the services they require.
In rank order we have identified where our priorities lie in developing
market presence to acquire clients.
1.
2.
3.
4.
Word of mouth
Client testimonials
Local business associations
Traditional print media, Internet advertising, and miscellaneous
promotion technique
KEY PARTNERS
We view our partners and network of business contacts as a reflection how
we get business done. Without the partners and business contacts we could
not operate as an operationally lean company and most importantly,
leverage this network for continued sales and business growth. The
following list provides a window into the depth and breadth of engagement
required to make our business go.
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Paint product and supply manufacturers
Commercial/retail suppliers at large
Financial institutions
Community-based business network
Business associations
Better Business Bureau
CONCLUSION
The future looks bright of Paint and we fully expect to be recognized in the
marketplace and we will be able to achieve growth and sustain profitable
operations through reputation and adherence to our most basic operating
philosophies for maximum competitive advantage.