Pre-Feasibility Study

SOCIAL MEDIA MARKETING AGENCY

Year 2021
 TABLE OF CONTENTS
1 EXECUTIVE SUMMARY......................................................................................3
1 INTRODUCTION TO SMEDA..............................................................................3
2 PURPOSE OF THE DOCUMENT........................................................................4
3 BRIEF DESCRIPTION OF PROJECT & PRODUCT...........................................4
3.1 Installed and Operational Capacities...........................................................5
4 CRITICAL FACTORS...........................................................................................6
5 GEOGRAPHICAL POTENTIAL FOR INVESTMENT..........................................6
6 POTENTIAL TARGET CUSTOMERS / MARKETS.............................................7
7 PROJECT COST SUMMARY..............................................................................7
7.1 Project Economics.......................................................................................7
7.2 Project Cost..................................................................................................8
7.3 Space Requirement.....................................................................................9
7.4 Furniture & Fixtures Requirement................................................................9
7.5 Office Equipment Requirement..................................................................10
7.6 Computer Equipment Required.................................................................11
7.7 Human Resource Requirement.................................................................11
7.8 Utilities and Other Costs............................................................................12
7.9 Revenue Generation..................................................................................12
8 CONTACT DETAILS..........................................................................................13
9 USEFUL WEB LINKS........................................................................................13
10 ANNEXURES......................................................................................................15
10.1 Income Statement......................................................................................15
10.2 Balance Sheet............................................................................................16
10.3 Cash Flow Statement.................................................................................17
11 KEY ASSUMPTIONS.........................................................................................18
11.1 Operating Cost Assumptions.....................................................................18
11.2 Production Cost Assumptions....................................................................18
11.3 Revenue Assumptions...............................................................................18

1
1. INDUSRTY OVERVIEW

An IT technology company (often tech company) is a type of business entity that

focuses on the development and manufacturing of technology products, or providing
technology as a service. “Technology”, in this context, has come to mean electronics-
based technology. This can include businesses relating to digital electronics,
software, and internet-related services, such as e-commerce and Social Media
Marketing.

For the purpose of this business plan, we will be looking at software development as
a service. Software as a service (or SaaS) is part of the Business Analytics and
Enterprise Software Publishing industry and players in this industry consist of
companies that are into ERP software, BI software, CRM software, SCM software
and other software development and they may decide to strictly adopt the Software
as a services (SaaS).

Social media marketing industry is emerging as one of the rapidly growing business
ventures all over world as well as in Pakistan. There has been an increasing trend of
establishing ‘Social Media Marketing Agency’ during the last decade, especially in
urban cities. However, this trend is also spreading to small cities and towns due to
increasing use of social media i.e. Facebook, Instagram, Twitter etc., as an easy,
adorable and fast medium for business promotion and advertisement.

Some of the factors that encourage entrepreneurs to start their own Software as a
service (SaaS) business could be the growing recognition of economic and
operational benefits and the efficiency of this business model. As companies ease
out gradually from the economic uncertainties and financial shackles, widespread
adoption of Software as a service is in the offing.

The successful adoption of this technology concept will pave the way for mass
enterprise adoption of Software as a service in the upcoming years. The transition of
enterprises from virtual machines to the cloud will additionally extend the impetus
required for strong growth of Software as a service (SaaS).

Poised to score the maximum gains will be end-to end cloud-computing solutions that
offer complete functionalities ranging from integration of internal and external clouds,
automation of business-critical tasks, and streamlining of business processes and
workflow, among others.

Over and above, starting a software as a services (SaaS) company requires

professionalism and good grasp of how the ICT industry works. Besides, you would
need to get the required certifications and license and also meet the standard
security expected for players in the industry in the United States.
2
2. EXECUTIVE SUMMARY

QBee Tech. is an IT tech startup that will specialize in offering software as a service
(SaaS). The business will be based in Islamabad.

QBee Tech. is a client – focused and result driven IT tech startup company that is
into ERP software, bi software, CRM software, SCM software, IOS and Androids
app/Web development as well as SMM (Social Media Marketing). We will provide
broad – based services at an affordable fee that won’t in any way put a hole in the
pocket of our clients. We will offer standard and professional services to all to our
clients.

At QBee Tech. our client’s best interest would always come first, and everything we
do is guided by our values and professional ethics. We will ensure that we hire
professionals who are experienced in the business analytics and enterprise software
publishing industry in general.

QBee Tech. will at all times demonstrate her commitment to sustainability, both
individually and as a firm, by actively participating in our communities and integrating
sustainable business practices wherever possible. We will ensure that we hold
ourselves accountable to the highest standards by meeting our client’s needs
precisely and completely.

Our plan is to position the business to become the leading brand in software as a
service (SaaS) business amongst the top 10 IT tech startup companies in the
Pakistan within the first 10 years of operation. This might look too tall a dream but we
are optimistic that this will surely be realized.

QBee Tech. will be owned and managed by Nauman Naveed Qureshi. He has a
Master’s Degree in Business Management. He is a certified Google Data Analytic
and has over 10 years’ experience.

Pakistan has a huge potential to attract IT-enabled services market by providing

software applications to various developed countries. The demand is expected to
flourish in the upcoming years. Many countries prefer outsourcing from Pakistan
because of the lower cost of manpower and advanced technological infrastructure. It
enables the IT sector to bring in good investment opportunities in the country as well
as to create of more job opportunities in Pakistan.

The IT services company will offer a wide range of software applications relating to
data bases and creation of animations. The applications mainly encompass
technology outsourcing, systems integration, application development, processes
consulting, business intelligence consulting, and information security consulting
3
among others. Background knowledge and technical qualification of the entrepreneur
and key staff is extremely important in success of the proposed venture.

The estimated cost of the project is Rs.6.80 million out of which Rs. 4.76 million
would be capital investment and remaining Rs. 2.05 million would be for working
capital. The project is proposed to be financed through 50% debt and 50% equity.
The project NPV is around Rs. 6.68 million, with an IRR of 38% and payback period
of 3.23 years. The project will provide employment opportunities to 13 people
including owner manager. The legal business status of this project is proposed as
‘Sole Proprietorship’.

2 BRIEF DESCRIPTION OF PROJECT & PRODUCT

The proposal is based on two of the main sub sectors of software development
industry in Pakistan; namely Database Development and Animations. These sub
sectors offer aspiring entrepreneurs a compelling opportunity to establish business in
one of the top export-oriented sectors of Pakistan. Easy and sustained access to
highly trained professionals coupled with availability of required infrastructure makes
this sub sector an attractive opportunity for entrepreneurs to venture into software
development and social media marketing in Pakistan.

This project mainly focuses on potential investment opportunity in the area of software
development and more precisely data base development and animation creation.
However, other products and services related to various sectors such as finance,
insurance, human resource etc. can also be offered under the project, without any
additional equipment.

The proposed IT Services Company is based upon two divisions, each consisting of a
software architect, an analyst, two developers, one mobile app developer and one
social media marketing person working on an 8-hour shift and generating around
4,160 value hours for customers.

The agency will offer three main packages (i.e. Silver, Gold and Platinum) comprising
of different portfolio of services and pricing. The pricing of each package will vary
according to the offered services. Apart from these three basic packages customized
social media marketing packages may also be offered to the clients as per their
specific business requirements. Financial analysis shows the unit shall be profitable
from the very first year of operation. The legal status is proposed to be ‘Sole
Proprietorship’
Process Flow of Services

4
2.1 Process Flow of Services Installed and Operational Capacities

The installed and operational capacity of Social Media Marketing (SMM) business
venture mainly depends on the market size and potential clients. The proposed SSM
agency is assumed to facilitate around 64 customers annually. However, the initial
operating capacity of the project will be 45% with maximum service facilitation of
90%.
Table 1: Installed and Operational Capacity

5
 Maximum
Total Operational
Operational
Capacity (No Capacity 45 %
Description Capacity 90%
of Clients) (Year 1)
(Year 10)
Local Clients – SMM Services
Silver Package 4 2 4
Gold Package 4 2 4
Platinum Package 2 1 2
International Clients – SMM Services
Silver Package 4 2 4
Gold Package 4 2 4
Platinum Package 2 1 2
SEO Service
Local Clients 8 4 7
International Clients 8 4 7

6
Individual Clients (Non-permanent)
Event Marketing One Day 1 5 1
2 1
SMM Campaign One Week 8 4 7
SMM Campaign Two Weeks 8 4 7
Total 6 3 5
4 1 9

3 CRITICAL FACTORS

Following are the factors critical for the success of this business venture;
 Background knowledge and technical qualification of the entrepreneur and key
staff.
 Hiring and retention of competent and qualified staff.
 Higher return on investment and a steady growth of business is closely
associated with regular training and capacity building of the entrepreneur and
key staff.
 Selection of an appropriate location with accessibility of high speed internet
connectivity.
 Maintaining a clean, hygienic, and healthy office environment.
 Marketing and promotion through various channels i.e. outdoor advertisement,
TV & cable ads, and promotion through social media (Facebook etc.).
 Thorough understanding of international regulations related to piracy and
copyright protection. Formulation and implementation of customer follow up
and feedback systems.
 Make effective use of facilitation agencies like P@SHA, PITB and PESB etc.

4 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

The recommended location for establishing a software house is a commercial plaza

of any large metropolitan city of Pakistan due to the easy availability of required labor
and IT infrastructure.
In this regard, Pakistan Software Export Board (PSEB) has established Software
Technology Parks (STPs) in Islamabad, Karachi, and Lahore to facilitate the IT and
IT enabled Services (ITeS) companies operating in Pakistan. Designed with a view to
getting business ventures up and running in the shortest possible time, these STPs
provide office space with all the modern conveniences in prime business locations in
these major cities. These dedicated premises provide a comfortable working
environment, high-speed international data connectivity, and an uninterrupted power
supply, with minimal regulatory overheads and paperwork, to its registered companies.
Additionally, there are lot co-working spaces and Business Incubation Centers
operating in all major cities across Pakistan. These spaces are equipped with
adequate facilities and security arrangements. Investors can rent out office space in
these designated spaces and commercial plaza’s for the proposed venture.

5 POTENTIAL TARGET CUSTOMERS / MARKETS

In local market there is an increasing trend towards the use of social media marketing
tools and platforms. A lot of small, medium and large enterprises are shifting towards
SMM for performance-driven marketing results at affordable pricing.
Potential target customers for the social media marketing service will mainly
comprise of clients from local corporate and business sector as well as international
business enterprises. As majority of the target local customer belongs to business
segments, therefore, the business clients operating in major big cities, such as
Lahore, Karachi, Peshawar, Islamabad, Quetta, Faisalabad, Multan, Rawalpindi and
Hyderabad will be key potential markets for the proposed venture.

6 PROJECT COST SUMMARY

A detailed financial model has been developed to analyze the commercial viability of
Social Media Marketing Agency. 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 annexures.

6.1 Project Economics

All the figures in this financial model have been calculated for estimated revenue of
Rs. 8.249 million in the year one. The capacity utilization during year one is worked
out at 45%.
The following table shows internal rate of return, payback period and net present
value of the proposed venture.
Table 2: Project Economics

Description Detail
s
Internal Rate of Return (IRR) 68%
Payback Period (Yrs.) 2.90
Net Present Value (Rs.) 27,326,213
Calculation of break-even analysis is as follows:
 Table 3 :Breakeven (100% Equity Based)
Break-Even
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Analysis
Break-Even
7,035,822 7,028,999 7,127,454 6,873,418 6,462,748 6,574,927 7,004,456 7,540,425 8,131,150 8,978,343
Revenue
Break-Even
83 75 69 61 52 48 46 45 45 45
Units
Margin of
15% 27% 37% 52% 68% 74% 79% 81% 83% 86%
Safety

However, for the purposes of further explanation the Project Economics based on
Debt:Equity (i.e. 50:50) Model has also been computed. Based on Debt:Equity model
the Internal Rate of Return, Payback Period and Net Present Value of the proposed
project are provide in the table below.
Table 4: Project Economics Based on Debt (50%) : Equity (50%)

Description Detail
s
Internal Rate of Return (IRR) 68%
Payback Period (Yrs.) 2.90
Net Present Value (Rs.) 33,005,263

The financial assumptions for Debt: Equity are as follows:

Table 5: Financial Assumptions for Debt:Equity Model

Description Detail
s
Debt (50%) 2,013,390
Equity (50%) 2,013,390
Interest Rate on Debt 12%
Debt Tenure 5
Debt Payment / Year 2

The projected Income Statement, Balance Sheet and Cash Flow Statement attached
as annexures are based on 100% Equity Based Business Model.

6.2 Project Cost

Following fixed and working capital requirements have been identified for operations
of the proposed business.
 Table 6: Project Cost

Description Amount Rs.

Capital Cost
1,596,900
Furniture & Fixtures
1,002,000
Computer Equipment
437,500
Pre-Operating Costs
144,900
Office Equipment
240,000
Building Security
25,000
Machinery & Equipment
Total Capital Cost 3,446,300
Cash 500,000
Upfront Building Rent 80,000
Total Working Capital 580,000
Total Project Cost 4,026,300

6.3 Space Requirement

The proposed Social Media Marketing Company will be established in rented
premises. In this regard space may be acquired in a technology park, commercial
plaza or at co-working space facility. The amount of rent will depend on the vicinity of
the office as well as the floor on which it would be located. The office can also be
established in an independent house unit that can be used for commercial purposes.
If the required office space is acquired on rent on 2nd or 3rd floor of any plaza the
cost will be slightly lower.
An estimated covered area of 800 sq. ft. will be required for the proposed venture.
This space requirement has been based on the No. of staff required to facilitate the
estimated clients. The monthly rent of the above area is estimated at Rs. 80,000 per
month. Three months advance will be given as security for acquiring the proposed
area.

6.4 Furniture & Fixtures Requirement

Details of the furniture and fixture required for the project are given below.
Table 7: Furniture & Fixture

Unit Cost Total Cost

Descriptio Quantit
(Rs.) (Rs.)
n y
Table & Chairs (Owner Office) 1 35,000 35,000
Visitor Chairs (Owner Office) 2 8,000 16,000
Sofas (Owner Office) 4 20,000 80,000
Table & Chairs (BDM) 21 35,000 35,000
Visitor Chairs (BDM) 2 8,000 16,000
Workstations and Chairs (SMM & SEO
2 23,500 47,000
Manager)
Visitor Chairs 2 6,000 12,000
Workstations and Chairs
1 23,500 23,500
Accountant
Cupboard 1 15,000 15,000
Workstations and Chairs 8 23,500 188,000
Visitor Chairs 3 6,000 18,000
Long Table 1 80,000 80,000
Chairs 12 6,000 72,000
Bracket Fans 6 3,800 22,800
Exhaust Fans 3 2,200 6,600
SMD Bulbs (24 Watts) 30 1,000 30,000
Air Conditioners (1 Ton Split) 5 60,000 300,000
Renovation 1 600,000 600,000
Total 1,596,900

6.5 Office Equipment Requirement

Following office equipment will be required for the project are given below.
Table 8: Ofice Equipment

Unit Cost Total Cost

Description Quantity
(Rs.) (Rs.)

1 77,000 77,000
LED for Office
1 39,900 39,900
Fridge
Security Equipment’s 1 25,000 25,000

Water Dispenser 1 19,000 19,000

Microwave Oven 1 7,500 7,500

Telephones 1 1,500 1,500
Total 169,900

6.6 Computer Equipment Required

Following office computer equipment will be required for the project are given below.
Table 9: Computer Equipment

Unit Cost Total Cost

Description Quantity
(Rs.) (Rs.)

Laptops 7 125,000 875,000

1 23,000 23,000
Computer printer (s)
1 14,000 14,000
Scanner
UPS with Batteries 1 90,000 90,000

Total 1,002,000

6.7 Human Resource Requirement

In order to run operations of Social Media Marketing smoothly, details of human
resources required along with number of employees and monthly salaries are
recommended as under.
Table 10: Human Resource Requirment
Monthly Salary
Description No. of Employees
per person (Rs.)

Owner / Manager 1 100,000

Accounts Officer and HR 1 35,000

Social Media Manager 1 75,000

SEO Manager 1 75,000

Content Writer 1 50,000

Designer 1 50,000

Business Development Executive 1 35,000

Office Boys 1 17,500

Total 8 437,500
6.8 Utilities and Other Costs
An essential cost to be borne by the project is the cost of electricity. The electricity
expenses are estimated to be around Rs.13,375 (Direct and In direct) per month.
Furthermore, promotional expense being essential for marketing of Social Media
Marketing Agency is estimated as 1% of revenue.

6.9 Revenue Generation

Based on the capacity utilization of 45%, sales revenue during the first year of
operations is provided in the table below.
Table 11: Revenue Generation – Year 1

No. of Sale Price / Sales Revenue

Description
Customers Clients (Rs.) (Rs.)

Local Clients – SMM Services

Silver Package 2 216,000 432,000
Gold Package 2 312,000 624,000
Platinum Package 1 408,000 408,000
International Clients – SMM Services
Silver Package (USD) 2 3,900 1,237,470
Gold Package (USD) 2 4,500 1,427,850
Platinum Package (USD) 1 5,100 809,115
SEO Service
Local Clients 4 264,000 1,056,000
International Clients (USD) 4 3,300 2,094,180
Individual Clients (Non-permanent)
Event Marketing One Day 5 8,000 40,000
SMM Campaign One Week 4 10,000 40,000
SMM Campaign Two Weeks 4 20,000 80,000
Total 3 8,248,615
1
7 CONTACT DETAILS

In order to facilitate potential investors, the contact details of machinery suppliers are
provided below.
Table 12: Machinery Suppliers

Name of
Addres Phone E-
Supplier
s mail
GF-19 Ground Floor, (0313)-
Techno City, Hasrat 2212988
Mega Mohani Road, I.I. [email protected]
Computer Chundrigar Road (0313)-
Karachi 4537591
Suit # 106, 1st Floor, Uni
Center, I.I Chundrigar 0336-
Indus Tech [email protected]
Road Karachi 75400 2275332

8 USEFUL WEB LINKS

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

Government of Pakistan www.pakistan.gov.pk

Ministry of Industries & Production www.moip.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 Baluchistan 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

www.tdap.gov.pk
(TDAP)
Security Commission of Pakistan (SECP) www.secp.gov.pk

Federation of Pakistan Chambers of Commerce

www.fpcci.com.pk
and Industry (FPCCI)
State Bank of Pakistan (SBP) www.sbp.org.pk

Punjab Small Industries Corporation www.psic.gop.pk

Sindh Small Industries Corporation www.ssic.gos.pk

Pakistan Software Export Board www.pseb.org.pk

Pakistan Software Houses Association for IT www.pasha.org.pk

and ITEs

Information, Science & Technology Department www.istd.sindh.gov.pk/

Sindh
Cyber Vision International www.cybervision.com.pk

AT&R Social Media Marketing www.atnr.pk

iCreativez www.icreativez.com/
9 ANNEXURES

9.1 Income Statement

Calculations SMEDA
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 8,248,615 9,654,639 11,275,131 14,467,301 20,453,917 25,736,124 33,318,677 39,153,393 48,883,368 65,534,619

Cost of sales
Direct Lahour 4,620,000 5,082,000 5,590,200 6,149,220 6,764,142 7,440,556 8,184,612 9,003,073 9,903,380 10,893,718
SEO tool AH REF for boosting 188,476 226,696 271,208 324,460 388,169 464,386 555,570 664,657 795,163 951,295
Operating costs 2 (Internet) 123,729 144,820 169,127 217,010 306,809 386,042 499,780 587,301 733,251 983,019
Operating costs 3 (direct electricity) 80,249 88,274 97,102 106,812 117,493 129,242 142,167 156,383 172,022 189,224
Total cost of sales 5,012,455 5,541,790 6,127,637 6,797,502 7,576,613 8,420,227 9,382,128 10,411,414 11,603,816 13,017,256
Gross Profit 3,236,160 4,112,849 5,147,494 7,669,799 12,877,304 17,315,897 23,936,549 28,741,979 37,279,553 52,517,363

General administration & selling expenses

Administration expense 630,000 693,000 762,300 838,530 922,383 1,014,621 1,116,083 1,227,692 1,350,461 1,485,507
Building rental expense 960,000 1,056,000 1,161,600 1,277,760 1,405,536 1,546,090 1,700,699 1,870,768 2,057,845 2,263,630
Electricity expense 80,249 88,274 97,102 106,812 117,493 129,242 142,167 156,383 172,022 189,224
Water expense 69,300 76,230 83,853 92,238 101,462 111,608 122,769 135,046 148,551 163,406
Travelling expense 6,300 6,930 7,623 8,385 9,224 10,146 11,161 12,277 13,505 14,855
Repair and maintenance expense 25,200 27,720 30,492 33,541 36,895 40,585 44,643 49,108 54,018 59,420
Communications expense (phone, fax, mail, internet, etc.) 69,300 76,230 83,853 92,238 101,462 111,608 122,769 135,046 148,551 163,406
Office expenses (stationary, entertainment, janitorial services, etc 46,200 50,820 55,902 61,492 67,641 74,406 81,846 90,031 99,034 108,937
Promotional expense 82,486 96,546 112,751 144,673 204,539 257,361 333,187 391,534 488,834 655,346
Professional fees (legal, audit, consultants, etc.) 164,972 193,093 225,503 289,346 409,078 514,722 666,374 783,068 977,667 1,310,692
Depreciation expense 507,340 507,340 507,340 569,480 559,460 562,651 634,586 622,987 622,987 706,261
Amortization of pre-operating costs 87,500 87,500 87,500 87,500 87,500 - - - - -
Miscellaneous expense 1 31,500 34,650 38,115 41,927 46,119 50,731 55,804 61,385 67,523 74,275
Subtotal 2,760,348 2,994,334 3,253,934 3,643,923 4,068,794 4,423,772 5,032,088 5,535,324 6,200,997 7,194,959
Operating Income 475,812 1,118,515 1,893,560 4,025,876 8,808,510 12,892,125 18,904,461 23,206,654 31,078,556 45,322,403

Other income (interest on cash) 22,922 45,989 59,641 82,025 137,882 194,893 263,913 355,208 442,659 581,453
Other income 2
Gain / (loss) on sale of machinery & equipment - - - - 10,000 - - - -
Gain / (loss) on sale of computer equipment - - 250,500 - - 540,485 - - 876,179 699,494
Earnings Before Interest & Taxes 498,734 1,164,504 2,203,701 4,107,901 8,956,392 13,627,503 19,168,375 23,561,862 32,397,394 46,603,350

Earnings Before Tax 498,734 1,164,504 2,203,701 4,107,901 8,956,392 13,627,503 19,168,375 23,561,862 32,397,394 46,603,350

Tax 4,937 66,450 220,555 652,370 2,254,737 3,889,626 5,828,931 7,366,652 10,459,088 15,431,172
NET PROFIT/(LOSS) AFTER TAX 493,797 1,098,054 1,983,146 3,455,531 6,701,655 9,737,877 13,339,444 16,195,211 21,938,307 31,172,178

17
9.2 Balance Sheet

Calculations SMEDA
Balance Sheet

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 500,000 1,333,739 2,345,356 2,425,911 4,136,103 6,894,436 8,697,034 12,416,034 16,000,608 19,412,152 27,104,052
Pre-paid building rent 80,000 88,000 96,800 106,480 117,128 128,841 141,725 155,897 171,487 188,636 -
Total Current Assets 580,000 1,421,739 2,442,156 2,532,391 4,253,231 7,023,276 8,838,759 12,571,932 16,172,095 19,600,787 27,104,052

Fixed assets
Building Security 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000 240,000
Machinery & equipment 25,000 22,500 20,000 17,500 15,000 44,407 38,716 33,026 27,335 21,644 15,954
Furniture & fixtures 1,596,900 1,437,210 1,277,520 1,117,830 958,140 798,450 638,760 479,070 319,380 159,690 -
Computer equipment 1,002,000 671,340 340,680 1,169,960 777,160 394,380 1,354,375 899,660 456,544 1,567,859 1,041,469
Office equipment 144,900 130,410 115,920 101,430 86,940 72,450 57,960 43,470 28,980 14,490 -
Total Fixed Assets 3,008,800 2,501,460 1,994,120 2,646,720 2,077,240 1,549,687 2,329,812 1,695,225 1,072,239 2,003,683 1,297,422

Intangible assets
Pre-operation costs 437,500 350,000 262,500 175,000 87,500 - - - - - -
Total Intangible Assets 437,500 350,000 262,500 175,000 87,500 - - - - - -
TOTAL ASSETS 4,026,300 4,273,199 4,698,776 5,354,111 6,417,971 8,572,963 11,168,570 14,267,157 17,244,334 21,604,470 28,401,474

Liabilities & Shareholders' Equity

Shareholders' equity
Paid-up capital 4,026,300 4,026,300 4,026,300 4,026,300 4,026,300 4,026,300 4,026,300 4,026,300 4,026,300 4,026,300 4,026,300
Retained earnings 246,899 672,476 1,327,811 2,391,671 4,546,663 7,142,270 10,240,857 13,218,034 17,578,170 24,375,174
Total Equity 4,026,300 4,273,199 4,698,776 5,354,111 6,417,971 8,572,963 11,168,570 14,267,157 17,244,334 21,604,470 28,401,474
TOTAL CAPITAL AND LIABILITIES 4,026,300 4,273,199 4,698,776 5,354,111 6,417,971 8,572,963 11,168,570 14,267,157 17,244,334 21,604,470 28,401,474

18
9.3 Cash Flow Statement
Calculations SMEDA
Cash Flow Statement

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net profit 493,797 1,098,054 1,983,146 3,455,531 6,701,655 9,737,877 13,339,444 16,195,211 21,938,307 31,172,178
Add: depreciation expense 507,340 507,340 507,340 569,480 559,460 562,651 634,586 622,987 622,987 706,261
amortization of pre-operating costs 87,500 87,500 87,500 87,500 87,500 - - - - -
Pre-paid building rent (80,000) (8,000) (8,800) (9,680) (10,648) (11,713) (12,884) (14,172) (15,590) (17,149) 188,636
Cash provided by operations (80,000) 1,080,637 1,684,094 2,568,306 4,101,863 7,336,903 10,287,644 13,959,857 16,802,608 22,544,145 32,067,074

Financing activities
Issuance of shares 4,026,300 - - - - - - - - - -
Cash provided by / (used for) financing activities 4,026,300 - - - - - - - - - -

Investing activities
Capital expenditure (3,446,300) - - (1,159,940) - (31,907) (1,342,776) - - (1,554,431) -
Cash (used for) / provided by investing activities (3,446,300) - - (1,159,940) - (31,907) (1,342,776) - - (1,554,431) -

NET CASH 500,000 1,080,637 1,684,094 1,408,366 4,101,863 7,304,996 8,944,868 13,959,857 16,802,608 20,989,714 32,067,074

19
10 KEY ASSUMPTIONS

10.1 Operating Cost Assumptions

Descriptio Detail
n s
Travelling Expense 1% of Administration
Expense
Communication Expenses 1.5 % of Direct Staff
Salaries
Promotional Expenses 1 % of Revenue
Depreciation Method Straight Line
Depreciation Rate 33% on Office Equipment
10% on Furniture & Fixture
Inflation Growth Rate 10%
Electricity Price Growth Rate 10%
Salaries Growth Rate 10%

10.2 Production Cost Assumptions

Description Details

Maximum Clients 64

Clients in First Year 31

Percentage Increase in Clients 5%

Internet Expense 1.5% of Revenue

SEO Tool for Boosting US $ 99 per Month

10.3 Revenue Assumptions

Descriptio Detail
n s
Sale Price Growth Rate 10%
Hours Operational / Day 10
Days Operational / Year 300

20
Social Media Marketing SMM Local:
Silver Package Rs. 18,000 per Month
Gold Package Rs. 26,000 per Month
Platinum Package Rs. 34,000 per Month
Social Media Marketing SMM International:
Silver Package US $ 325 per Month
Gold Package US $ 375 per Month
Platinum Package US $ 425 per Month
SEO Local Rs. 22,000 per Month
SEO International US $ 275 per Month
Non-Permanent Clients:
Event Marketing One Day Rs. 8,000
SMM Campaign One Week Rs. 10,000
SMM Campaign Two Weeks Rs. 20,000

21