The internet would also be a tool, yet not a main one, to advertise our service. We would be using social networking sites like face book to update other organizations with our continuous success.
We are also planning on designing our own website that will be handled by one of our members who acquires a great experience in designing online websites. Minor improvements will be added to the apartment such as office furniture to enable it to seem more professional for our clients. We will be recruiting our staff based on their acquired Diplomas and their experience in this field, focusing on selecting the most professional since our operations are highly dependent on the skills of the staff, which will be responsible for handling the entire loan process that begins with determining the creditworthiness of a borrower and ends at full repayment of the loan.
The staff is required to operate five days a week Sunday-Thursday , five hours a day 9a. We will also focus on continuous training of our staff members to ensure that they are further qualified for handling the job.
Our staff will mainly include local representatives and loan officers, the representatives will be responsible for addressing our service to the targeted market, investigating their background as well as ensuring the healthiness of their documents. On the other hand, local officers will be responsible for approving the loans and observing the clients from the second they acquire the loan. The number of borrowers will be divided on our staff members to ensure that each employee is handling a number of clients through the entire process.
They will be in charge of making sure that borrowers are on the right track of investment, help them develop skills in their area of interest to be able to generate income hence reducing the risk of defaulting borrowers. In case the representative feels that the client is interested in our service, he would inform the client about our official headquarters where he could get all the information he wants.
As soon as the client steps into our office, the representatives will explain to the client the entire idea of providing the loans and the other services that follow up such as seminars and continuous monitoring and observation to enable the client to feel that our goal is for their benefit to experience an actual change in their lives.
When the client agrees on the terms set, official documents are required such as national ID and other documents for assets owner ship or lease agreements for high amount loans equal or exceeding 5, EGP, a contract must be made with our future hire legal advisor, to make sure this loan is secure and will be return or at least the loaned person be liable for their actions.
Once the representative has a clear idea about the client he will either approve or disapprove the loan, in case the client is approved the amount of loan will vary depending on the borrowers condition and the project they agree to start implementing, but will usually revolve around our organizations loan ranges see services plan.
After the client is approved by the representative, the final step will be held by the loan officer who agrees on terms and conditions in terms of the loan amount and the repayment. Once the borrower acquires the loan the monitoring process begins by the loan officer who ensures revenue generation and repayment on time.
We will focus on questions like; what could be done to make it a more pleasant experience? From this we will be able to identify what our clients would prefer the most, and work on continuous improvement of our service.
Development Plan Our organization does indeed expect our business to grow and develop as people become more familiarized and accepting of our services. Through rigorous marketing, and a deliverance of extremely helpful services that allow self development, personal growth and entrepreneurial knowledge, we will have a dynamic boost in the number of our loaned customers See financial plan for exact numbers.
With this dynamic boost and addition to our operations, it is essential that our organization not succumb to biting off more than we can chew, in terms of both loan deliverance and services, as well as overexerting our capital too soon. The key to our successful livelihood is sustainability, where we find a growing number of people taking more loans, and the existing loan takers sufficiently paying back their payments.
With this current flow of sustainability and growth, our organization has put into effect a conceptual development plan that will allow us to measure our improvement and our effectiveness as a non-profit loan giving entity. We will do this via local marketing channels or methods, such as hanging banners, post flyers, wall paint advertising, and word of mouth.
This first marketing campaign will really give us exposure within the community, and hopefully bring in more customers to take a loan and use our services. Also, by successfully obtaining this number we would have a more than optimal capacity within our first year but may be close to maxing out on the work load our labor force is capable of. Thus if and when we reach this amount, it will be necessary to start looking to expand our workforce, recruit new potential managers, and scout for a new branch location.
This branch would most likely open after at least 2 to 3 years from our start date of operations. With this new branch, comes a newer, larger capacity, greater expenses, bigger labor force, increased asset value, augmented organization net worth, and influence of our organization. At this point we would need to hire branch managers, and a more extensive sales force and representatives. Management Plan Our non-profit organization is fortunate to not only have a dedicated and highly adept business team, but also vast business potential with a business concept very few tackle within Egypt.
Our 5 founders of Microfinance, Inc. With this knowledge firmly secured with our founders, as well as the employment of a fully proficient representative, a sales team, and experienced legal advisor, we feel confident that our services will be highly valued and used within the Mataryia and Ain Shams area.
Management Team It has been decided that the 5 founders of the group will each take a managerial role in the organization and have all unanimously decided to forfeit a salary for each person. However, for managerial compensation, refer to the ownership structure section found below.
Not only that, but his ability to relate and bond with the local neighborhood will be an additional benefit in linking our organization with the people who may very well take loans from us in the future. Also, due to his superior skill from previous personal experience, he is able to responsibly implement strategies and policies which include but not limited to: employment of qualified staff and reps. Cherbini, a finance major at AUC and one of the 5 co-founders, has had ample exposure to relevant business cases with marketing applications.
His relevant experiences of communicating ideas, convincing skills and dynamic presentation style will surely be an asset to the organization of events, seminars, and training sessions, in which he will hold direct responsibility of.
After sufficient exposure to the region and better understanding of what public relations entails, it is our hope that Ahmed will be a competent PR manager in that he will assure a successful and positive connection with our organizations stakeholders and will be directly responsible for the image and reputation of our organization. She has proved herself to be exceptionally proficient in the field of operations management and excels beyond the other groups standards in operation techniques and application.
She is also well familiarized with the GAAP Generally Accepted Accounting Principles and has prepared numerous financial statements for a number of case situations. His charisma, his interest in legal affairs, personal contacts within the Lawyers Syndicate Nikabit al Mohamiyeen and close connection and knowledge with the government makes him the ideal candidate that will pursue these legal aspects of our business, along with our legal advisor, to make sure loans are according to the law, monthly payments are being made, and that our organization obtains the essential benefits and status of being non-profit.
Due to his internship training as a sales representative, he has the vital skills and strategies necessary to pursue the sales for the organization as well as manage the 5 future employed sales staff. It is his responsibility to obtain the organizations target loan goals as decided by a developed forecast, and make sure the sales team will be working effectively, respectfully, and upholding the organizations beliefs, practices, and culture, which is to serve and help the customer improve themselves, their business, and their lives.
If the managerial founders feel there is a drastic business function that is not being fulfilled within their organization, they will concurrently hire a qualified manager for the position. However, currently the 5 co-founders believe that their positions and current manpower is sufficient to operate the organization and have it running well. Due to planned expansion and greater loan taking customer base, we will have to open new branches as mentioned in the development plan, and thus will need more manpower to run these new branches, and possibly more managers other than the 5 co-founders to supervise each branch.
Organizational Chart Microfinance, Inc. Co-Founders Tamer A. Sergany Rami M. All profit or surplus capital from what may be dividends, interest, etc will be re- invested into the organization. Ownership Structure Due to the fact each co-founder has given up what may be considered a monthly salary, the ownership of the organization is divided equally among the 5. Hopefully, when the organization increases in value, the ownership value of each founder will be increased.
All fundraising money or donations, although invested in the company, is not included within the net worth calculation and ownership structure of each member. All other employees within our organization will receive a monthly salary, contracted by Abdel Rahman, and deducted as labor expenses in our financial reports.
Since our first apartment branch is owned by Tamer Sergany, if our company for some reason must be liquidated, the title deed of the apartment is non-negotiable and complete ownership is given to Tamer Sergany. Corporate Social Responsibility To give back to the community in which one does business in is just as important as having a successful profitable business.
So when your business is non-profit and your existence is for a cause, then you know your organization practices CSR. When your mission objective and your vision is to see a better community, a better society, one with a better standard of living, then you know that it is the society that comes first.
We are a non-profit organization that lends money to individuals who want to improve themselves and their current standard of living, who have a hope that they may work and be pro- active in their lives, and return it back to the community in which they live. If we can carry out our organizations business and carry out successful and sustainable operations, and have our services truly appreciated, then we have successfully carried out our organizations mission and our responsibilities, our obligation to society.
For major decision making, every founder has 1 vote and the simple majority follows through with the decision process, such as opening new branches, hiring key managers, etc. And we have defined and formulated our competitive advantage based on the three main types of our competitors.
In the beginning, we define ourselves as a special micro financing service that offers a business consulting service in addition to the loan. According to Michael Porter there are two main competitive strategies, differentiation based and cost leadership based. Based on the industry and market analysis, we will apply differentiation strategy and focus strategy geographically. In order to formulate our competitive strategy we must define our main resources and capabilities.
Basically our main resource is human resources; our high management board is AUC business graduates, which have a good knowledge of all business fields.
Moreover, we will recruit loan officers from AL Mataryia and Ain Shams -our target neighborhood- and they will have a good knowledge about the culture of the neighborhood. In addition to that, the nature of the business as being a non-profit this will create a positive image in the market, and will facilitate building trust between the organization and the customer. We have an access to an apartment in Ain Shams owned by one of the organization owners which will lower our costs.
And by the way rent is fairly cheap in both neighborhoods if we decide to expand. Financially, we have another advantage, based on our non-profit nature we are exempted from paying taxes and we will get financial support from a governmental institution which is the SFD, which will be offering us loans at a rate lower than the market rate.
And for our capabilities, the population of our target neighborhood is extremely huge compared to our targeted potential customers. Furthermore the nonprofit nature of our organization, will allow us to recruit volunteers and interns who will be doing a charity and a social service to the society and at the same time gaining real job experience. It is obvious that after the revolution several Egyptian youth have shown a great social responsibility and the desire to work for a better country; this is an opportunity for our organization that will facilitate our growth.
After presenting our resources and capabilities, we will present our competitive strategy. Our competitive advantage plan is based on three main parts, differentiation and focus strategies. Starting with the focus strategy, this strategy is based on concentrating on one geographical area Ain shams and Al Mataryia , which will help us to concentrate our marketing efforts in one neighborhood, which will make us more effective and efficient.
Also word of mouth is an important aspect in our marketing strategy, so the focus on one geographical area will facilitate the spread of the positive word of mouth. Another part of our focus strategy is that we are going to offer one specific service which is Microfinance, while our competitors will be working on more than one charity service.
Focusing on one service will increase our efficiency. It might be argued that the focus strategy creates a risk of diminishing demand, but in our case this is not true, because the population in our targeted neighborhood is huge compared to our potential target market. Also according to the CAPMAS, 10 percent of the people willing to work are unemployed, so in our target population there are 36, unemployed.
Our second strategy is the differentiation strategy, which is that our service is going to be perceived as one of a kind or a unique added value. The added value we will be offering the business consulting service , which is basically helping the lender in all business fields such as marketing , finance, accounting and operation management. The benefit behind our added value is that; first, it will ensure more that we will get back our money, this will increase our profitability.
Also some might argue that competitors will imitate, but , because the founders are the AUC students it will be expensive to hire AUC business graduates or any business graduates for this service , so we have a cost barrier for competitors who would aim to imitate us. Our third strategy is cooperative strategy, we are a nonprofit organization that basically aims to facilitate and aid the development of the society and most of our competitors are the same.
So we basically have no problem to cooperate and even we can divide neighborhoods or share knowledge and experience. To display the efficiency of our competitive strategy we will display how we will allocate them according to our competitors that are divided to direct competitors, indirect competitors and potential competitors.
Our direct Competitors are LEAD organization and Coptic Evangelical Relief Services, both are nonprofit organizations who have customers in Ain Shams and Mataryia, yet they are focused on all over Cairo, while we are having a focus competitive strategy.
At the same time the service is fairly new and not well known, so the appearance of new competitors will facilitate making the service popular, and we would apply cooperative strategy with potential competitors or any other competitors. Risk Considering the risks that are going to face our business is an essential part in business planning and how we are going to mitigate those risks or overcome their effects.
We will define all the risks we might face, and how will act to reduce their effect, and then we will use porters five forces model to explain our situation. Financial Risk: This composed of the lending interest rate and the Inflation interest rates.
At the moment, lending interest rates have been reduced by the Central Bank to drive the economy out of the recession, but usually the interest rates are not volatile in Egypt. For instance lending interest rates in Egypt were It is not very volatile it is been moving around 0. And it is estimated that interest rates will be lowered again because the economy is going through a recession. The second variable that is creating a direct financial risk to our business is inflation.
Second main risk is bad debts, our lenders are going to start new projects or finance their existing businesses, and there is a possibility that some of the lenders might fail to return the money they borrowed. To reduce the risk of bad debts, we will hire loan officers who live in Mataryia, that will be following up with our customers, checking how their business is going. Second is that we will study the business plan of each of our customers to make sure that they will succeed in returning the money.
E, so the failure of one customer to pay back will not create a huge loss for the corporation. Forth we are going to diversify our investments, for example we are not going to lend people who are going to invest in the same sector. The Third main risk is the macroeconomic risk, the country now is going through times of instability, and consumption might not be as high as many people lost their jobs during the recession after the revolution.
We will try to allocate a portion of our investments in projects that produce products that have inelastic demand. Our financial statements assume a modest number of borrowers compared to our competitors and the industry starting average. After much deliberation through meetings and interviews we have agreed that for the starting number of borrowers is reasonable.
The potential customers in our stating area Mataryia are more than sufficient to meet this number as we have explained. For expenses; we have also taken expenses from competitors averaging their costs to come up with ours.
However that does not mean that we are undifferentiated as mention before we focus on quality as our main aspect and this is what will set us apart. Also it is important to note that our average loan is 3 years so it will take a while to see our money return. Employees To achieve the quality we set out our employees will well trained but also as an incentive our 3 types of employees are given commissions based on the number of loans in different portions.
This will create a drive to improve in the employees and create loyalty between them and the company. We require donation in the beginning but we will be able to sustain ourselves with our own operations. The donations we acquire later will go into giving out more loans when required.
Expansion We open a second branch in year 3 to increase our reach and to also allow better handling of the large borrowers we expect in the future. Funding As an up and coming organization, we have limited resources for our funding as an organization.
We will depend heavily on two components, which is derived from our own equity funding and through grants from financial and funding institutions. First off, the loans we pursue from our immediate families along with our savings will be estimated at , from each of the five founders, which is a total of , L. In addition, we will see more funds from our relatives and we expect to garner another , The supporting spirit will be great, since they are family.
We are fully aware of the fact that it will take the right business concept, management, and organization structure to achieve our set goals. The presence of other several companies that are in the same industry as we are present all around the region is why we are following the due process of establishing a business. This is the summary of the SWOT analysis that was conducted;. A lot of people, startups, and corporate organizations are in need of microloans to help them achieve their goals.
This fact is a huge opportunity with which the lending industry has presented us. Threats in this business will comprise unfavorable government policies, the arrival of a competitor within our location of operation, and a global economic downturn. Also, huge losses can be incurred in the following situations; sharp and prolonged spikes in interest rates, accounting control fraud, or the collapse of inflated real estate bubbles. We also understand that the typical investment bank is operated on a rigid, strict hierarchy, than most corporate or financial institutions.
We have taken our time to analyse our market and what we need that is why we have decided to start with the listed workforce. We at AIB LLC understand that the very first step of starting a new bank is to build a strong business and strategic plan. We believe that this plan must consider the proposed business of the new bank, its financial and managerial resources and prospects for success, the convenience and needs of the public, and the effect of competition. This strong business and strategic plan supported by detailed financial projections and appropriate policies and procedures form the basis of successful regulatory applications of a bank charter.
We at AIB LLC hope to establish a lucrative investment bank that will serve the needs of our clients and also bring in profits for our founders. The details and results are explained below. With the experience and discipline of our team, our SWOT analysis predict we can build a robust company profile even before biding for investment banking contracts from corporate organizations.
As the investment banking industry expands and grows in revenue and market reach, so does the level of competition in the industry. Due to the very low barriers to entry, any individual or business may register itself as an investment bank after completing the proper examinations and filings.
The banking sector has become one of the fastest growing business sectors in the U. Note that computerized technologies allow financial firms to operate advisory, investment banking, and brokerage services anywhere in the country.
In time past, most financial firms needed to be within a close proximity to Wall Street in order to provide their clients the highest level of service. This is no longer the case as a firm can access almost every facet of the financial markets through Internet connections and specialized trading and investment management software. Experts believe this industry will continue to experience growth in all parts of the world especially in developed countries such as united states of America, Canada, United Kingdom, Germany, Australia, South Korea, Japan, China et al.
Although the number of industry activities has not deviated dramatically over the five-year period, the share of revenue that each activity accounts for has undergone substantial volatility. It is believed that the products and services in the Investment industry differ considerably on a company-by-company basis, largely depending on operator size. Alternatively, major industry players earn a substantial share of revenue from trading activities. Note that one factor that attract entrepreneurs to the investment banking business despite the huge capital requirements and the high risk is that the venture is profitable.
We have made plans to always stay ahead of industry trend and also to get the required certifications and license and also meet the standard capitalization for an investment bank in the United States.
Have it in mind that most of the marketing opportunities will happen beyond the first year of product development. But we remain very certain that some initial opportunities do exist. We at AIB LLC also believe that the high net worth and retail marketplace can be accessed to a limited degree, even in the early stages, through similar innovative opportunities and already-established relationships with clients. Just like manufacturing organizations, investment businesses are expected to develop products to provide to their customers.
Our competitive advantage. The first two determine the latter. Although our business plan highlights many areas market research, financial projections, etc.
We believe that the very first is the people. We were able to note from our rigorous research that the most qualified investment professionals are attracted to efficient investment banks that are free from bureaucracy. Process is the second most important element of our bank. We have made sure cutting-edge research will be provided in support of our portfolio management process.
We at AIB LLC understand that the key to marketing an investment product is to create a successful and attractive product, develop a pattern of success, and show that pattern can be repeated in the future. After that, successful products should be aggressively marketed if capacity to manage additional assets exists.
Although a three to five-year period tend to seem like a century compared to the technology world, it is really quite reasonable considering the fact that private equity investors in limited partnership vehicles are generally satisfied with a year waiting period that exists prior to a return of their capital investment. Technological advancements also permit for other economically feasible distribution channels such as separately managed portfolios for large account sizes.
We believe that our primary income at AIB LLC will come from providing our clients with investment packages, securities underwriting and advisory services in regards to mergers and acquisitions.
AIB LLC will earn substantial fees for the equity and debt instruments that it underwrites and then resells to the general public. We also believe that we will engage primarily in debt instruments among middle market companies that will be sold on a best efforts basis. This will place minimal risk on our capital reserve. We will also earn substantial per hour management and deal fees regarding advisory services for mergers and acquisition operations.
We also plan to make investments directly into marketable securities and hedge funds that specialize in specific areas of trading. We plan to engage in a covered call strategy that would allow the fund to assure return on investment for securities that are held for an extended period of time.
We strongly believe that this is consistent with an average holding period of three years. We understand the importance of creating a good publicity plan that will boost our brand and help us stay consistent in the industry.
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