CYCLIGHT  PTE  Business  Plan  Team  Eagle  Three  

   

Excerpt  From  Executive  Summary:    Cyclight’s  profit-­‐driven  philanthropic  approach  is  extremely  unique  and  potentially  successful.  With  a  market  populated  equivalent  to  that  of  countries,  Cyclight  has  many   options   to   choose   from   to   grow   its   revenue  and  market   penetration,  while  still  achieving  a  solid  philanthropic  mission  that  could  help  the  lives  of  many  rural  villagers  by  providing  a  sustainable,  affordable  source  of  light.  

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Table  of  Contents    

BUSINESS  DESCRIPTION   3  

INDUSTRY  OVERVIEW   3  COMPANY  SUMMARY   4  PRODUCTS  &  SERVICES   6  POSITIONING   10  PRICING  STRATEGY   10  

MARKETING  ANALYSIS   11  

CUSTOMER  ANALYSIS   11  MARKET  SIZE  &  TRENDS   11  COMPETITION   12  SALES  FORECAST   12  

START-­‐UP  SUMMARY   13  

START-­‐UP  PROCESS   13  START-­‐UP  COST   14  OPERATING  REQUIREMENTS   14  

MARKETING  PLAN   14  

MARKETING  STRATEGY   14  ADVERTISING  AND  PROMOTION   15  

MANAGEMENT  PLAN   15  

MANAGEMENT  STRUCTURE  CHART   15  DESCRIPTIONS  OF  POSITIONS  &  PERSONNEL  PLAN     16  

FINANCIAL  PLAN   17  

RISKS   17  FUNDING  REQUEST  &  RETURN   18  

APPENDICES   19  

APPENDIX  1:  PROFIT  &  LOSS  (INCOME)  STATEMENT   19  APPENDIX  2:  CASH  FLOW  STATEMENT   20  APPENDIX  1:  BALANCE  SHEET   20    

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BUSINESS DESCRIPTION

• Industry Overview: Cyclight’s initial target consumers will be located in Indonesia’s Java Island, more specifically Central Java Province, where there is still an enormous rural population. Indonesia’s Java Island is the most densely populated island on the planet. With a land area of only 130,000 km2 and a staggering population of 140 million people or equivalent to that of Russia, this area is subject to a lot of potential economic growth. Nonetheless, Java maintains a large rural population; even with rural villagers migrating to cities due to the expedited urbanization, rising costs in cities greatly limit their ability to spend. Our targeted region, Central Java (one of the three main provinces in Java – East, West, and Central) has the 2nd most rural population out of the Java provinces. This rural population typically lives in villages, locally known as desa, of populations between 3,000 and 4,000 people, according to a study of the Regional Typology of Java (Desa is considered the lowest form of government outside the urban realm; it is the equivalent of a town located in rural locations). In the island of Java alone, there are roughly 11,000 desas each with an average population of roughly 3,500 people (according to web.ipb). Among that number of desas, Arupa organization’s studies state that 6,381 are located in dense forest regions, as of mid-2008. And since Central Java and West Java have the most dense forest regions, roughly 2,500 of the forest-desas are located in Central Java with approximately 4,500 total in Central Java Province(according to web.ipb). Due to the forest location, these desas have limited access to many basic necessities such as sewage, clean water, and most importantly for Cyclight’s sake, lighting. Typical lighting sources in these rural regions include kerosene lamps, which is 95% more expensive then our LED lighting source, inherently inefficient, and potentially hazardous (according to Nuru: the company which our business idea is based on). Incandescent light bulbs and fluorescent light bulbs powered by car batteries or diesel fuel generators are also among the light sources used in these rural regions. Even the more developed desas that have access to power lines often have limited lighting usage due to the electrical expense and frequent blackouts: a factor that Cyclight’s LEDs and recharging products will potentially eliminate as well. This means that we’d be able to expand our potential target market outside of the already large market of “jungle desas.” With this enormous potential of industrial growth in mind for LED lighting, so far there has not been any direct competition from companies/businesses within the LED industry. Consequently, our entrance to this industry would automatically result in our being the immediate leaders of the industry. And to further clarify, the lack of competition in the LED industry for rural villages is mainly due to the dearth of businesses with philanthropic missions in Indonesia and Indonesia’s weak philanthropic efforts in rural areas overall. Also, following Indonesia’s economic boom in the past decade, most businesses have focused their attention to urban markets and the middle class, with banks and consumer products being the most profitable ventures. Hence, there is a shortage of supply for cheap lighting in rural regions and demand is potentially high. Nonetheless, we consider our competition to be the traditionally used incandescent light bulbs (one per house) and kerosene lamps.

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And our comparative advantage over these companies is simply that our products are proven to be more luminous (brighter), energy efficient, cost effective, and mobile. Cyclight also holds the upper hand against incandescent lights because, apart from kerosene lamps, we are the only lighting company that specifically targets rural villagers. We also hold an advantage over kerosene lamps as we train our entrepreneurs to market LED lights as cheaper and healthier then kerosene lamps. As a result of the potentially high demand, our projections for the long-run future are relatively bullish. Although the rural regions of Java are slowly diminishing due to the economic boom and urbanization, our mobile and flexible business system will allow us to shift our target market to other islands in Indonesia with large rural populations, such as Southern Sumatra, Papua, and the myriad of small islands east of Java, or even to another country in the region like Cambodia or Vietnam. Conclusively, Indonesia’s economic activity will affect our company minimally. However, entrance to Indonesia’s rural desas does present potential risks and obstacles. Indonesia’s history of corruption in it’s sub-governments would mean that desa leaders may ask for a percentage of profits or some other form of compensation for allowing our business to enter. To alleviate this issue, we will either yield to the demands of the desa leader and expand more aggressively to cover our costs or appeal to higher government for clear entrance. Fortunately, one of our company officers, Klevrin Sitohang, is Indonesian and his family has connections with higher government officials whom may assist and has assisted such issues for philanthropic organizations in the past. Another major risk Cyclight faces is acceptance. Research has been done; one of our company members visits rural desas often for personal philanthropy purposes; and industrial statistics have been found and analyzed; nonetheless, our target market rural villagers may or may not accept our product based on misunderstandings of its purpose. Especially since these villages are fairly detached from modern society, cultural limitations may pose a threat to growth in market penetration in each desa. Hence, Cyclight has developed a training program that will train the entrepreneurs in each village in the basics of salesmanship, brand awareness and education on product features, and marketing. To bypass the education barrier, rural entrepreneurs will only be charging one price for services, preventing any confusion. This will hopefully allow for smoother cultural acceptance and prevent cultural misunderstandings by customers. Other barriers that we have considered are relatively minor ones; Cyclight already has solutions in place for these trivial issues.

• Company Summary:

-Mission Statement: Our franchise, Cyclight Pte, has a mission to provide rural areas of Indonesia, initially Central Java, with cheap and efficient lighting using bicycle-re-charged LEDs (light emitting diodes). In doing so, we provide microloans to small-time entrepreneurs in these rural areas to use the charging equipment and run his or her private company for profit, thus creating employment and a new, creative, sustainable microbusiness industry. But apart from our primary philanthropic goals, our secondary mission is to also achieve profit from interest on loans, expand our market capital, and expand our market penetration.

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Picture a young and motivated Indonesian boy, one of five siblings in his family, returns from his desa’s school; he is forced to study hard so as to advance himself out of the limits of his rural desa. The sun sets. His home has only one incandescent light bulb but due to frequent blackouts, its usage is very limited. So the child takes a match, strikes it, and lights a kerosene lamp in order to continue his homework in the darkness. While filling his mind with tools and theories for a better future, he also fills his lungs with toxic fumes from the kerosene light. On top of that, his eyesight gets worse due to the dim lighting. Up next, his other four siblings need the kerosene lamp for their homework. And his father can barely afford the $0.13 kerosene lighting for them all. Multiply this issue to 700 families in the desa and to 4,500 desas in Central Java. You get a potential problem for 3.15 million families in rural desas or roughly 15.8 million people total; that’s more than the population of Cambodia and equal to 21% of Java’s entire population. What is the solution to this enormous problem? Cyclight is the solution. With our micro franchising approach, Cyclight will loan out cheap, durable LED lights and the machinery needed to recharge them to entrepreneurs in various desas (most likely the established shop owners mentioned before). Entrepreneurs will be charged a percentage of their profits annually in return for the loan of equipment. After passing a salesman-training course led by our officials, entrepreneurs will loan out the lights to customers, such as the family of the boy mentioned, at the profitable and affordable prices determined by our company. In short, they run the business in the local-desa level giving us mobility and a sustainable business model, while still being able to achieve profits from the percentages we take from the entrepreneurs. With approximately 3,500 people in each desa and plenty of extremely rural desas in need of such products, the potential market penetration is enormous. Also, the benefits and effects in each desa are potentially enormous too. Entrepreneurs will receive employment and an income higher then the minimum wage after approximately six months of growing market penetration into the desa (keep in mind that usually rural villagers earn much less then the designated minimum wages). At the same time, villagers will reap the benefits of not having to use the expensive, toxic kerosene lighting or the expensive, inconsistent incandescent light bulbs; replaced instead by our cost-efficient, energy-efficient, and environmentally-friendly rechargeable LED lights. Villagers simply rent out 5 LED lights at-a-time for a price of USD$0.30 paid out to the entrepreneur inclusive of the bicycle recharging prices. The young, motivated boy and his siblings can see clearly, breath clearly, and achieve their academic potential with the help of Cyclight’s franchise. -Company Structure: Cyclight is to be a partnership with three main contributors: Viraj Bindra, Alexander Amstrup, and Klevrin Sitohang. Each contributor has different skills to add value to the company besides pooling resources for start-up. Viraj Bindra is skilled in marketing aspects and finances; he will determine the best prices for the desa entrepreneurs to charge the villagers based on data provided by Klevrin Sitohang. Sitohang is Indonesian and has a breadth of experience in philanthropy in desas of Indonesia and rural areas of other South East Asian countries. He will devise strategies for future growth, find relevant information for Cyclight’s daily operations, and coordinate with people in the desa level if needed. Alexander Amstrup is skilled in logistics; he will be running Cyclight’s operations on a daily basis in terms of shipping, inventory management, etc.

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-Support Systems: Since our company is mainly relying on local entrepreneurs to run the different franchises and on the training program that qualifies those entrepreneurs, Cyclight’s advertising campaigns, customer service, and other support systems are very minimal. Our main advertising campaigns, for example, will be located in places where these desa entrepreneurs usually buy their stock of goods that they resell in respective desas. In other words, our marketing campaign is aimed at the entrepreneurs and not the final users of Cyclight products and services. More of this is discussed later.

• Products and Services:

Cyclight’s PRODUCTS consist of only two pieces of machinery. Lights: Our first product is an extremely cheap, energy-efficient, rechargeable LED light that Cyclight will initially purchase from the company Nuru Lights in Africa: the company in which we based Cyclight’s main ideas from.

Here are the features in accordance with Nuru’s descriptions: Multifunctional (Can Be Positioned in Many Ways): -Free standing -Neck strap -Head strap -Wall mount -Bottle mount -Hung -Connected together to form a room light Affordable: The Nuru Light (used by Cyclight) is the most affordable light in

the world, due to its light and energy efficiency combined with our affordable sales approach of loaning out the lights to final users, initially, for only $0.30 per week inclusive of recharge prices.

Bright: Uses bright white LED bulbs that never break and never need to be replaced.

Durable: Has been designed with durability and ruggedness in mind. Customizable: 3-position switch allowing 1 LED or 2 LEDs to be turned on

per light. Efficient: Rechargeable NiMH battery which when fully recharged produces

20 hours of light (in 2 LED mode) or 40 hours of light (in 1 LED mode) – about 1 to 2 weeks of light – in just 20 minutes of charging! The result is a

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600:1 use to charging ratio, compared to just 1:1 with solar. Modular: The modular design allows for lights to be separated during usage. The user can use the lights separately or connect them together to create a brighter light, such as for entire room lighting. (Credit to Nuru Lights in Africa and their website: http://nurulight.com/).

With these lights, Cyclight’s franchise entrepreneurs will rent out five pieces at a time at a price of USD$0.30 per week inclusive of recharging the lights using the bicycle charger (discussed next). The end users will thus be the villagers of the respective desas. They will reap the benefits of Nuru Light’s (used by Cyclight) features above. Bicycle Chargers: Cyclight’s second product, also initially purchased from Nuru Lights in Africa, is a bicycle charger that is used to re-charge the LED lights previously mentioned using Kinetic Energy. These machines will be part of the franchise package that desa entrepreneurs will receive from Cyclight. They will also operate the machine on a weekly basis for their village customers to recharge the lights for future rental (inclusive in the USD$0.30 weekly rental price charged out to the villagers/end users).

Here are the features of the Charger in accordance with Nuru Light’s descriptions:

Nuru Light has developed the world’s first commercially available pedal generator. Unlike wind and solar, the pedal ensures that power is always available. The POWERCycle can charge up to five lights at once in just twenty minutes of pedaling. Each charged light will last for 35 hours, resulting in a charging ratio of 525:1, making it over 500 times more efficient than solar! Because the POWERCycle is easy to operate, children can even use it. (Credit to Nuru Lights in Africa and their website: http://nurulight.com/).

As previously mentioned, the bicycle chargers is merely a tool that is used by the desa entrepreneurs to recharge the package of 5 LED lights loaned out to customers in the desa. The entrepreneurs’ usage of the machine is inclusive in the charged price set by Cyclight, initially USD $0.30. However, our business’ key to success is the SERVICE portion. Cyclight has two main services: one provided by the entrepreneur to the customers, which is key to revenue; and one provided by Cyclight employees (specifically: regional managers) to the desa entrepreneurs, which is key to market penetration in the targeted desas.

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Our Service to the Entrepreneurs: Indonesia’s poverty situation has meant that education, especially in terms of business dealings, penetrates a very small population. Unfortunately, these rural desas are among those less reached by sufficient education. Therefore, Cyclight can’t just simply loan out the recharging equipment and lights to the entrepreneurs without putting them through a proper training course to educate them. If we didn’t provide this service, entrepreneurs might just simply sell the loaned out equipment thinking it would be more profitable to do so than to use its service qualities over a long period of time. Clearly, a scenario like this would disrupt Cyclight’s philanthropic mission and profit mission too. Hence, although it’s not something we directly charge or generate revenue from, service to the entrepreneurs is crucial to Cyclight’s success. Here are the features of the education service we provide to the entrepreneurs:

Under the human resources manager, there are two officials that are key to this service (mentioned in the management plan) – staff training specialist and technical support staff. The staff-training specialist is the initial educator in this service and the technical support staff ensures that the education is applied into the salesmanship of the desa entrepreneurs. The technical support staff also provides guidance should their be any questions regarding the machinery or the way to run the business in accordance with Cyclight policy. Both officials will be Indonesian and above the age of 40. This is to prevent any cultural misunderstandings of respect in terms of educating the entrepreneurs.

The staff-training specialist will provide the following in his/her service for the following reasons: -Basics on how to run the business à This includes understanding the pricing scheme directed by upper Cyclight officials and basic salesmanship, such as greeting customers and cleaning shop space regularly. Also, it makes sure that -Basics on how to observe and derive customer satisfaction à This is so Cyclight can change the prices for rental and update our entrepreneurs in terms of service standards using personally extracted data. -Marketing the comparative benefits of bicycle rechargeable LED lights over kerosene lamps and traditional light bulbs à This is so entrepreneurs don’t run off and do something rash because of lack of knowledge. But this lesson is also crucial in solving the “acceptance” problem discussed in the industrial overview. Just as Cyclight must educate its entrepreneurs, the entrepreneurs must educate their customers so they also don’t go off and sell the products. Customers must understand the health benefits over the kerosene lamps, price reductions versus kerosene lamps, luminosity advantages over kerosene lamps and traditional light bulbs, consistency advantages over traditional bulbs, etc. The technical support staff will provide the following in his/her service for the following reasons: -Assist with any malfunctioning equipment à Rural villages often have at least one telephone. Entrepreneurs simply call if equipment malfunctions and technical support will arrive ASAP to come and assist.

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-Answer questions and provide updates à If entrepreneurs have questions regarding the lessons taught by the training staff, support staff answers. They also provide pricing or product updates based on the consistently updated data provided by entrepreneurs to the upper Cyclight officials.

Entrepreneurs’ service to the customers in the desa: This service is what directly generates revenue and ironically, it is much simpler than the services to the entrepreneurs. In general, according to Nuru’s data, which is less lenient compared to our initial estimates, families will typically spend 5 hours with the lights daily. Since the total battery life per light is 35 hours, the typical battery life per light is one week. Therefore, Cyclight will initially inform the entrepreneurs (part of the education service) that their village customers MUST return or renew their rental of the package of 5 lights within OR earlier then 7 days (1 week). The service is provided when customers return to renew their rental of the lights: the entrepreneurs simply recharge the lights in 20 minutes using the bicycle charger equipment that Cyclight purchases from Nuru and distributes to registered entrepreneurs. However, if customers return later than 7 days, entrepreneurs will charge 2% extra for every additional late day. However, customers can renew their rental of the lights before the 7-day limit. This would occur in the event that customers use the lights more often than the predicted norm, and thus battery life is zapped quicker forcing them to return to the shop quicker for recharge. In other words, the rental must be renewed if the battery runs out before the 7-week limit. However, as mentioned before, the entrepreneurs will be trained to report customer satisfaction and that can be applied regarding this limit. For example, a certain desa on average may use the lights much less often then other desas, hence they would prefer longer renewal periods so they can use up their battery life more efficiently. In this case, Cyclight will increase the limit for that particular desa but only a maximum of four days, so we protect our revenue stream. Comparative Advantage: As previously mentioned, desa entrepreneurs and their village customers must be educated on the benefits of our products and services. Well, what are the comparative benefits of Cyclight products and services? Here are the main ones. There are MORE!

-More cost efficient à compared to kerosene lamps used in the extremely rural villages, our lights are more cost efficient. For example, kerosene lighting typically costs USD$2.30++ per week, while Cyclight only 30 cents. -Environmentally friendly à Kerosene is a fossil fuel, thus emits Carbon Dioxide. It also emits nitrogen oxide and sulfur oxide, which contribute to acid rain and ozone depletion. Improper disposal of short-lasting bulbs is also potentially harmful to the environment.

-Healthy à Doesn’t emit toxic fumes like kerosene lamps. -More energy and light efficiency à Brighter than both kerosene and many traditional bulbs; more bang for the buck of energy. Traditional bulbs are also subject to the frequent blackouts of power lines, limiting usage, less than 5 hr. -Provides employment à Employ people above the minimum wage: an unseen achievement in these extremely rural desas.

-Simplicity, Mobility, and Durability à Easy to use, mobile, and never dies. -Accident prevention à Prevents potential fires caused by kerosene lamps.

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• Positioning:

Although we can’t gain necessarily 100% market penetration in the initially targeted desas, we do have an upper hand in terms of penetrating the market, thus WE DO aim to gain 100% market penetration per desa in the first hundred or so desas we target. This advantage we possess, briefly mentioned in the industry overview, is that we are specializing our products for rural regions. This gives us a comparative advantage over traditional light bulbs and kerosene lamps because we educate our entrepreneurs and final users of the benefits of Cyclight. Our competitors, on the other hand, simply sell and let the market take care of itself; this leaves them vulnerable to our entrance into the industry. Conclusively, our customers will be educated of the advantages of our product and perceive it as the most healthy, cost-efficient, light-efficient, etc. light source (our Unique Selling Point). We will also attempt to appeal to the younger generation since undoubtedly, they will be using the LED lights most frequently for homework, etc. This position we will have is maintained to the desas we potentially expand into because of our service system.

• Pricing Strategy The main goal for Cyclight is to provide LED lights to impoverished rural Indonesian families at a price that is affordable and cheaper than that of kerosene. The fact that LED lights are brighter, cleaner, more efficient, and less expensive than kerosene lamps means that Cyclight can easily maintain its market share. Each year, in which Cyclight expands its number of entrepreneurs, fixed costs are present: the cost of pedal chargers and of LED lights. However, each year that Cyclight does not expand and simply maintains its market share, no fixed or variable costs is present—we simply collect a portion of the “entrepreneurs’” profits. Because of this unique condition, Cyclight will not make steady profits from year to year. As such, we will pay back debts from a year in which growth occurs with profit from a year in which no growth occurs. But overall, Cyclight is a sustainable business. Each entrepreneur could pay back his or her micro-loan within several months while continuing to make profits. Hence, LED recharge will initially cost each household USD $0.30 per week (assuming one pack of lights per household). This gives us an advantage over the commonly used kerosene lamps costing USD $2.30++ per week. In other words, we present an aggressive pricing strategy that attempts to completely undercut kerosene lamps. Also, our price are strategically determined to eventually provide the entrepreneurs with income that is above the minimum wage of USD$61.3 per month (Central Java Province only). This also gives us an advantage over traditional light bulbs because many shopkeepers in the desa usually sell traditional light bulbs to the villagers. These bulbs generate less income for them because customers only purchase new ones after several years. If they join our entrepreneur team, they would earn money faster and more efficiently then if they sold traditional bulbs, such as incandescent lights.

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MARKET ANALYSIS:

• Customer Analysis:

As briefly mentioned before, Cyclight’s customer base consists of families in the rural desas of Central Java, Indonesia. As mentioned in the industrial overview, the market potential is roughly 3.15 million families in rural desas. However, we will initially target only a couple hundred desas. And in each of those desas, we aim to supply ALL families because our product (lights) is a necessity and is “better” then the products they currently use, which are made by our competitors. We specifically target desas’ families because children attending primary and secondary schools (aged 6 to18) are usually the ones that require lighting most. However, their parents also require lighting (roughly aged 28 to 60). Typically, families in rural desas don’t generate a healthy form of income as their lives hinge on the practice of farming, which is contracted by private land owners of palm oil plantations, rice paddies, etc. These owners squeeze the farmers in terms of wages as much as possible. Even farmers that own their farm land will have to trade their output to corporations, whom squeeze the farmers in terms of purchasing price. As a result, the farmers don’t receive a fair income. Although their has been no formal study on wages of rural desas, it is known that most of these desa farmers earn less then the minimum wage of USD $61.3 per month; this includes the desa entrepreneurs/shopkeepers. Each family of farmers typically has between 3 to 5 children with an average household size of 5.5 people. Most of these children often do attend school but spend their hours afterschool either assisting their parents with farming activities or with their friends playing badminton or soccer (information based on a trip taken by Sitohang to extremely rural desas outside Semarang City with a local philanthropic organization: ars86care.org). As a result, homework is usually done in the evening where children either resort to traditional light bulbs that are expensive and often black out or to toxic kerosene lamps. Families typically spend no more then 5 hours with these light sources since they can only afford an average of one light source per household. Since the intensity of one light (whether bulb or kerosene lamp) is minimal, children and parents must take turns using the light source, hence the long usage period. On top of that, these desa families often live in very shabby dwellings with questionable roofing. It is considered a luxury to have tiled floors or forms of electrical outlet. Overall, people in rural desas have a very poverty-stricken lifestyle. Their income prevents them from spending out of necessity: on schooling more for than one children, on food for average 5.5 people per household, on clothing and daily cleanliness, and on lighting.

• Market Size and Trends: As previously mentioned, there are roughly 3.15 million families in Central Java Province that can potentially use our products and services. However, Cyclight will obviously not sell to all of them. Hence, we will initially target a couple hundred of the most rural desas we can find; specifically, the first two years we target 100 desas

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and the subsequent years 300 or more. These desas rely on farming and trade with corporations for their outputs as their source of income. Therefore, the village customers’ rental frequency of LEDs would depend on the market demand for food. Fortunately, in a world where food demand is beginning to exceed supply due to overpopulation, the trends for food involves drastic increases in prices rather then decreases. Farmers can use this increased trend to rent our products from the franchise entrepreneurs more frequently. But we still expect that our desa customers will on average rent only the one package of 5 lights at a time because we will target the most rural desas. Also, we do not expect our sales to be effected drastically, if at all, by national government policies. However, Cyclight will take precautions in approaching the potentially corrupt desa government as mentioned in the industrial overview. They may set biased local government policies that would undermine our mission/purpose.

• Competitors: Since we are the first LED light company to approach rural desas in Indonesia, Cyclight will not have any direct competition. We only have indirect competition: substitute products like kerosene lamps and traditional lighting sources. INDIRECT COMPETITORS

Strengths Weaknesses Comments

Kerosene Lamps -No specific brands make kerosene lamps (mostly hand crafted by local entrepreneurs)

-High market share in the extremely rural desas we target (almost every household will have one)

-Toxic fumes -Expensive à 7.6 times more expensive then our lights -Fire hazards -Dim lighting

-Easily beatable competition as long as our franchise entrepreneurs can explain Cyclight’s benefits over kerosene lamps

Traditional Light Bulbs (Fluorescent, incandescent, etc.) -We have found it hard to identify specific brands

-Used more often then kerosene if they have power lines. -Prices is relatively similar to Cyclight prices à sometimes households avoid payment by breaking into the electrical lines illegaly

-Fluctuates with electrical lines à often blacks out -Not durable, especially in unclean environments -Brightness fluctuates and is unreliable

-Quality leader hence we target EXTREMELY rural villages à one of the 6,000+ villages previously mentioned to be located in forests, whom don’t have access to these

• Sales Forecast:

Our sales are dependent on entrepreneurs and their ability to weekly rent out the equipment to as many customers in the desa as possible. Although Cyclight’s products and services are completely innovative, especially to the rural villagers, we are partially bullish (optimistic) and partially realistic on sales. This is because we have a comprehensive training program for our franchise entrepreneurs. We are confident that this training program will allow desa entrepreneurs to educate the people of the desa of the benefits of our product but understand that acceptance may take a while.

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Therefore, we forecast an average 8% market penetration per desa targeted in the first month; population of a single desa is on average 3,500 people. In subsequent months of the first year, we predict that market penetration will increase 1.2 times and the second year 1.1 times. By the end of the 2nd year we expect a 95% market penetration per desa of the first 100 hundred extremely rural desas we target. This forecast parallels our expectations that each customer will only rent one package of lights (5 lights per week inclusive of recharge) at a time but will continuously rent it out every week of the year; because lighting is a necessity. In terms of competition, kerosene lamps will have achieved 100% market penetration in the desas we target. However, they aren’t consistently selling to customers in the desa since one lamp can last for years and years at a time. In other words, our sales will not necessarily affect their sales in the short run (several years). Our sales, however, will affect the sale of kerosene fuel. Cyclight sales may even come close to completely depleting the revenue stream of kerosene sellers in these desas by the second year. And since we target desas that are extremely rural and mostly don’t have access to electrical lines, traditional light bulbs won’t pose an enormous threat to our sale. Our sales won’t greatly affect their sales either but if we sell in desas that have electrical lines, we expect less market penetration than the 95% by the end of the 2nd year: closer to 60% or less. Sales would also drop with the less penetration. START-UP SUMMARY

• Startup Process: As a distributor, we will not need to purchase a factory or manufacture our own products. Rather, the manufacturer shall supply us with both the machines and lights that our business needs to function. TIMELINE FOR BUSINESS STARTUP (for a business beginning in January 2012) August 2011 – Find office space, begin renting (4 weeks) September 2011 – Furnish office space (2 weeks) September 2011 – Obtain licensing to operate our business (4 weeks) September 2011 – Begin hiring process (8 weeks) October 2011 – Purchase machinery & equipment from Nuru Lights (1 week) October 2011 – Co-ordinate shipping of machinery to Indonesia (2 weeks) November 2011 – Ship product to Indonesia (6 weeks) Our process will begin in August 2011, when we search for office space in Jakarta, which will be the location for our base of operations. This will take approximately four weeks to find an appropriate space, and then we shall furnish it in September, which will take about 2 weeks. We will buy countless office supplies, one main computer, a telephone connection, furniture, perhaps an ornamental plant, and a truck. We will also obtain licensing and approval from Nuru Lights to operate our franchise, which will take approximately 4 weeks, including negotiations. We will simultaneously begin our hiring process in September, which will take a total of eight weeks, well into October. In October, we purchase initial machinery and equipment from Nuru Lights, and then coordinate its shipment to Indonesia, which will finally be executed in November 2011.

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• Startup Costs:

ITEM

COST

Office Space $2000/month Machinery $40,000

Lights $190,911 Mounting Frames $2,808

Truck $15,000 Supplies & Setup $6,650

Shipping $6,000 Wages $59000/year

• Operating Requirements:

The machinery we distribute will be purchased from Nuru Lights, a for-profit charity held up to rigorous regulations due to its funding from grants and competitions. We will also have our own mechanics verifying the individual pieces before shipment and scheduled maintenance once a month. This maintenance includes a static $2500 maintenance of the machines per month, and a total potential $1500 maintenance of the lights, depending on the level of market penetration (and subsequently, the number of lights). Our franchise, which will function as a makeshift for-profit charity, will submit itself to the regulation of the Ministry of Law and Human Rights in Indonesia. This will help ensure that the necessary precautions and actions are being taken to protect the villagers’ standards of living. As mentioned before, we will also do our best to ensure that individual entrepreneurs are earning above minimum wage within the first few months of business. Since the entrepreneurs buying our products are taking a risk, the burden is not ours to ensure that they reach minimum wage quickly, but we purposefully take only 40% of revenues from them, allowing them to attain sufficient money to sustain themselves and their families soon. Our supplier, Nuru Lights, will charge us $200 per piece of machinery, and $6 per set of lights. Each set includes five lights and is sufficient for one household, on average. Our business, as a franchise, is dependent on Nuru Lights delivering our products as necessary; there are no other available suppliers for the same product. MARKETING PLAN

• Marketing Strategy: Our marketing strategy in the desas relies on the implementation of salesmanship techniques by our franchise entrepreneurs, because we are in a very rural market. It hinges on the success of the staff training specialist in covering the topics (listed in the products and services section). It is the entrepreneur’s duty to educate the desa customers of the comparative advantages of Cyclight LEDs versus our indirect competitors’ lights. They must explain that Cyclight sells the most healthy, cost-efficient, light-efficient, etc. light source. Apart from marketing to village customers, we must also target entrepreneurs to want to join our franchise business and sell our

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products. To do this, we will specifically target the established shopkeepers of the various desas. These shopkeepers generally get their stock directly from another store in a more urban location. This is where Cyclight marketing comes in. Our director of partnerships will use his subordinates to establish connections with these stores. They will pay the store owner and explain that he/she must advertise by “word of mouth” explanation and pass on a flyer to rural desa shopkeepers that explains the franchise opportunity we offer.

• Advertising and Promotion:

Advertising in the rural desas will be done by “word of mouth” from the entrepreneurs to customers within the desa. The entrepreneurs can decide if they want to use other forms of advertising (pass out flyers, etc.) but this is the cheapest and the most recommended method. Our training program will make sure that all registered salesman/entrepreneurs are equipped with the knowledge needed to be able to sell the products. In terms of advertising to get entrepreneurs to join our franchise, we will create appealing flyers and establish a profitable deal for the suppliers of shopkeepers and established desa entrepreneurs in order to motivate them to promote our franchise. MANAGEMENT  PLAN       Cyclight  Pte.  is  a  partnership  comprised  of  three  owners:  Klevrin  Sitohang,  Alexander  Amstrup,  and  Viraj  Bindra.  The  owners  will  obtain  initial  investments  from  venture  capitalists  and  pay  them  back  over  a  given  period  of  time.    

     

 

Management  Director  

Director  of  Operations  

Director  of  Partnerships  

Director  of  Finance  

Human  Resources          Manager  

Staff  Training  Specialist   Technical  Support  

Staff  

Director  of  Manufacturing  and  

Design  

Regional  Managers  

“Entrepreneurs”  

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• Descriptions  of  Positions  and  Personnel  Plan:    At  the  top  of  the  management  hierarchy,  Cyclight  consists  of  a  Management  Director  at  the  top,  followed  by  a  Director  of  Operations,  a  Director  of  Partnerships,  and  a  Director  of  Finance.    The  Director  of  Partnerships  must  establish  relationships  within  the  rural  community  in  Indonesia.  He/she  is  responsible  for  hiring  rural  “entrepreneurs”  who  will  receive  a  micro-­‐loan  from  Cyclight  (in  the  form  of  Cyclight  LED  lights  and  a  pedal  charger).  These  “entrepreneurs”  will  generate  enough  revenue  to  reimburse  Cyclight  Pte  within  a  year  of  operation.  The  Director  of  Partnerships  must  target  women  or  married  men  with  children  to  act  as  Cyclight  “entrepreneurs”  because  they  are  more  likely  to  spend  income  on  the  education,  health,  and  nutrition  of  their  children  and  families  as  opposed  to  single  men.    Below  these  positions  is  the  Director  of  Manufacturing  and  Design.  The  Director  of  Manufacturing  and  Design  must  create  a  viable  blueprint  of  the  Cyclight  pedal  chargers.    Initially,  the  company  will  purchase  pedal  chargers  from  the  Nuru  Light  Company,  but  we  plan  to  have  the  Director  of  Manufacturing  and  Design  create  a  Cyclight  pedal  charger  and  LED  lights  in  order  to  lower  production  costs.    Once  the  concept  of  the  Cyclight  pedal  chargers  has  been  created,  he/she  is  responsible  for  the  actual  development  and  construction  of  Cyclight  rechargeable  LED  lights  and  pedal  chargers.  Cyclight  anticipates  that  the  construction  of  Cyclight  LED  lights  and  pedal  chargers  will  be  outsourced  to  China.  It  is  the  Director  of  Manufacturing  and  Design’s  job  to  act  as  the  liaison  between  Cyclight  Pte.  and  our  supplier.    The  Human  Resources  Manager  evaluates  the  socioeconomic  impact  that  Cyclight  technology  has  on  rural  populations  and  formulates  ways  to  improve  Cyclights  philanthropic  effects  and  the  company’s  efficiency.  Staff  Training  Specialists  work  personally  with  rural  “entrepreneurs”.  These  specialists  teach  the  “entrepreneurs”  the  ins-­‐and-­‐outs  of  the  Cyclight  pedal  chargers  and  LED  lights.  Furthermore,  the  specialists  explain  how  many  lights  an  “entrepreneur”  must  charge  on  a  daily,  weekly,  and  monthly  basis  in  order  to  meet  the  reimbursement  deadline  and  make  a  profit.  The  key  to  being  a  successful  “entrepreneur”  is  having  a  detailed  understanding  of  one’s  equipment  and  work  schedule.    Regional  directors  oversee  a  cohort  of  rural  “entrepreneurs”.  Regional  directors  must  remain  up  to  date  with  their  respective  “entrepreneurs”  and  supervise  their  actions  and  work  efficiency.    The  technical  support  staff  is  responsible  for  repairing  or  replacing  faulty  Cyclight  equipment.      The  rural  “entrepreneurs”  are  the  heart  of  Cyclight.  They  witness  and  contribute  to  Cyclight’s  philanthropic  dimension  firsthand.  By  charging  LED  lights  everyday,  these  entrepreneurs  provide  their  community  and  their  families  with  much  needed  lighting  and  income.  

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 Because  equipment  costs  are  present  during  years  in  which  growth  occurs  (cost  of  LED  lights  and  pedal  chargers),  we  expect  significantly  less  profit  than  in  years  in  which  no  new  entrepreneurs  join  Cyclight.  As  such,  in  year  one,  the  company  must  accept  loans  in  order  to  pay  wages.  Growth  takes  place  in  three-­‐year  cycles;  the  first  year,  Cyclight  attains  half  the  market  share  of  100  Desas.  The  subsequent  year,  Cyclight  attains  full  market  share  of  the  100  Desas.  The  third  year,  Cyclight  maintains  this  market  share  without  bearing  any  start-­‐up  costs.  This  way,  Cyclight  can  pay  back  half  the  wage  loans  from  year  one  and  year  two  with  the  larger  profit  margins  in  year  three.    

Personnel Plan Year 1 Year 2 Year 3 Management Director $80,000 $80,000 $80,000 Director of Finance $60,000 $60,000 $60,000 Director of Operations $60,000 $60,000 $60,000 Director of Manufacturing and Design $50,000 $50,000 $50,000 Director of Partnerships $50,000 $50,000 $50,000 Regional Managers $35,000 $35,000 $35,000 Social Evaluation Specialist $20,000 $20,000 $20,000 Staff Training Specialist $20,000 $20,000 $20,000 Technical Support Staff $15,000 $15,000 $15,000 Total People 17 27 27 Total Payroll $590,000 $840,000 $840,000

FINANCIAL PLAN

• Risks: Like all businesses, our franchise faces certain risks. The most crucial of these are the risks that would hamper our start-up process. This would include the denial of our ability to act as a franchise by Nuru Lights, which would thus restrict our access to the materials they provide. Although the chance of this is unlikely, since the company has issued statements claiming it wishes to grow and expand, and in the past has worked with other charities to help it achieve its goals, this would be a crippling move and is the only risk we would not be able to compensate for, as Nuru is currently the only supplier of the machines and lights we need. Thankfully, once our business has actually been launched, risks are minimal. Since we are operating in rural areas, the chance of recession striking is close to zero, but if for some reason we were hit by a cyclic trough, our strategy would be to downsize the scale of our operations. An economic trough or dry spell would see people doing away with non-essentials, and artificial light, in their eyes, is not crucial to their existence. We will inevitably see a decrease in market penetration, and our only solution would be to halt future growth and then reduce the number of entrepreneurs active in each desa. Doing so would increase (or at least maintain) the individual revenue brought in by each entrepreneur, and we could still expand by bringing the entrepreneurs who gave up the business in their desa to another surrounding region. Other risks involve the nature of Nuru Lights, namely in terms of efficiency, reliability, and pricing. We assume that the products from Nuru will be available with immediacy, and as we grow, we will have a steady stream of machines to offer to new entrepreneurs. However, we may be given a lower priority in the eyes of Nuru, since we are an independent franchise, and they may put their customers in Africa ahead of

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ours in Indonesia. In addition, there is the threat of price hikes. Being the only supplier of their product, Nuru has the ability to manipulate its prices as much as it sees fit. Our solution to both of these potential risks is to, after the first two to three years of business, once we have ample capital, purchase Nuru products and keep them in inventory. The inventory costs may pinch, but the security in knowing that the products are a mere truck ride away, and that they have already been paid for, is crucial. Another risk many companies may face that we will avoid is that of competition. Our goal as a charity, even as a for-profit charity, is bringing sustainable development to a specific rural region, not to make a profit. Much of the profits we do make will be kept as retained earnings, to provide extra amenities and security (such as the concept of keeping a large inventory). As a result, our prices are also very low. If any other company was to establish itself as a franchise of Nuru (or make their own similar products) and invade our region, they would not be able to make a profit for a fairly long time. However, if we were to face competition after the first few years of business, we would cut the amount of revenue we commission from the entrepreneurs to 20% rather than 40%. It would result in losses across the board, but very minimal losses, and there would be no way for another company to offer the same or better terms and make a profit. Finally, on a micro-level, our franchise faces the threat of rogue individual entrepreneurs. They would sign up with us, we would deliver their machine and lights at no money down payment, and then run off with everything and sell it for little more than the cost of a cell phone in a neighboring village. We have a two-fold plan to evade this issue, both involving the role of regional directors. Before we choose people from the desa to whom we would offer the ability to be an entrepreneur, appointed regional directors who are familiar with the areas will make it a point to find trustworthy nominees for this position. In addition, once the entrepreneurs have been chosen and their businesses are underway, the regional directors will be in charge of overseeing their operations. They will be very hands-on for the first few weeks of the business, and from then on will keep a watchful eye over the progression of their activities.    

• Funding Request and Return:  

As revealed in the losses represented by the income statement, the amount of funding we need to sustain initial losses over the first two years is $45,780.01. We will also need a total of $261,369 to pay for all the start-up costs. We will also require approximately $20,000 in case of unpredictable failures or losses. From the balance sheet, we can see that a total capital of $327,149.01 is necessary. It has been decided that $100,000 of this shall come from a long-term loan, made possible by the legitimacy of being a franchise of Nuru Lights. The rest of the capital necessary (a total $227,149.01) shall be provided by venture capitalists, whom will act as the owners of the company. These investors shall be provided with a cash-out option every five years, but will receive interest of 2% a year on their investment, in addition to tax rebates as a result of charity investment.

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As the company seeks growth approximately every two years, we may require the assistance of additional venture capitalists at each of those times. However, as we progress, retained earnings should eventually be able to fuel future growth. Also, as we gain legitimacy and a good credit score, there is a possibility of only seeking loans.

• APPENDIX 1 - Profit and Loss Statement:

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• APPENDIX 2 - Cash Flow Statement:

• APPENDIX 3 - Balance Sheet: Assets Liabilities

Fixed Assets Long-Term Liabilities $261,369.00 $100,000.00 Current Assets Owner’s Equity $97,729.50 $380,269.00 Total Assets Total Liabilities and Owner’s Equity $486,269.00 $486,269.00  Breakdown of Balance Sheet: Fixed Assets: Item Cost Machines 40,000.00$ Lights 190,911.00$ Mounting Frames 2,808.00$ Truck 15,000.00$ Supplies & Setup 6,650.00$ Shipping 6,000.00$

Current Assets: Cash that we would need to combat initial losses and an extra $20,000 for unexpected turbulence Accounts Receivable: Money owed by “Entrepreneurs” to fund pedal chargers and LED lights Long-Term Liabilities: Bank Loan of $100,000