BRAIN MASTERS BUSINESS PLAN (FINAL) TID-21
TEAM MEMBERS
1. MANSOOR KARIM, CEO,
[email protected], 0300-9471489 2. AHMED PASHA, COO,
[email protected], 0333-1766710 3. SYED MUHAMMAD FURQAN, CTO,
[email protected], 0321-6178548 4. MUHAMMAD YASIR JAVED, CTO,
[email protected], 0334-7684324 5. NAUMAN MIR, CMO,
[email protected], 0321-9789120
22-Q GULBERG 2, LAHORE, PAKISTAN 0313-4121524 REVISION HISTORY DATE
VERSION
DESCRIPTION AUTHOR
26/11/2014
1.0
12/12/2014
1.1
17/12/2014
1.2
Revised the Executive CEO, COO Summary as guided by mentor Revised Section 2 of CEO, COO Business Plan Revised Section 2 and CEO, COO 3 of Business Plan
Contents
Chapter # 1: ....................................................................................................... 4 Executive Summary .......................................................................................... 4 1.1
Overview ...................................................................................................................... 4
1.2
Market Need.................................................................................................................. 4
1.3
Opportunity Size ............................................................................................................ 4
1.4
Competition .................................................................................................................. 5
1.5
Economic Benefit ........................................................................................................... 5
1.6
Current or Potential Customers ......................................................................................... 5
1.7
Business Model.............................................................................................................. 5
1.8
Go to Market Strategy ..................................................................................................... 6
1.9
Our Team ..................................................................................................................... 6
1.10
Risks and Mitigation Strategy ......................................................................................... 6
1.11
Future Milestones ......................................................................................................... 6
1.12
Financials .................................................................................................................... 7
1.13
Exit Strategy ................................................................................................................ 7
Chapter # 2: ....................................................................................................... 8 Company Information ........................................................................................ 8 2.1 Company Description ........................................................................................................ 8 2.1.1
Product Market ........................................................................................................ 9
2.1.2
Product Industry....................................................................................................... 9
2.1.3
Company strengths and Core competencies................................................................. 10
2.1.4
Business Model...................................................................................................... 11
2.1.5
Achievements ........................................................................................................ 11
2.1.6
Legal form of Ownership ......................................................................................... 12
2.2
Products and Services ................................................................................................... 12
2.2.1 2.3
Pricing/ Fee Structure.............................................................................................. 14
Marketing Analysis ...................................................................................................... 15
2.3.1
Market Size ........................................................................................................... 15
2.3.2
Products / Services ................................................................................................. 16
2.3.3
Competition .......................................................................................................... 16
2.3.4
Niche ................................................................................................................... 17
Chapter # 3: ..................................................................................................... 18 Strategy & Plans ............................................................................................. 18 3.1
Overall Strategy ........................................................................................................... 18
3.2
Marketing Strategy ....................................................................................................... 18
3.2.1
Pricing Strategy ..................................................................................................... 19
3.3
Sales Strategy .............................................................................................................. 19
3.4
Operational Plan Summary ............................................................................................ 20
3.4.1
New Business Developments.................................................................................... 21
3.5
Management plan summary ........................................................................................... 21
3.6
Risks and Mitigation Plan .............................................................................................. 22
3.7
Strategic Alliances........................................................................................................ 22
3.8
Milestones .................................................................................................................. 23
3.9
Financial Plan Summary ................................................................................................ 23
3.10
Exit Strategy .............................................................................................................. 24
APPENDIX ....................................................................................................... 26 Appendix A1: Cashflow Chart ......................................................................... 26 Appendix B1: Diagram of the business model illustration its value chain ..... 27 REFERENCES .................................................................................................. 28
Chapter # 1:
Executive Summary “The mission of BRAIN MASTERS is to make a positive difference in the lives of individuals with lost upper limbs by assisting them in achieving functionality, comfort and a sense of touch through the development, integration, and distribution of the industry’s most advanced brain controlled electric prosthetics systems.” 1.1 Overview We are addressing Physical disability, which has not been addressed in growing countries like Pakistan, for this we are providing cheaper solution and converting disability to accessibility. The product is a prosthetic hand that assists a disabled person. The prosthetic arm is controlled, by the user through brain signal decoding, based on Electroencephalography (EEG), a Brain Computer Interface (BCI) and a mechanical structure of hand with moving fingers.
1.2 Market Need Since its inception Pakistan has been a victim of numerous extremists’ activities. The victim of these, merciless, activities have lost the use of limb. Current prosthetic product available in the market isn’t in the financial reach of SEC B & C. We intend to provide a product that is financially within the reach of all SEC’s.
1.3 Opportunity Size The market we intend to cater is a niche. Long-term plan is to provide the product in all the rehabilitation centers of Pakistan but initially we will target Lahore.
1.4 Competition Direct competitors are companies that make non-movement based prosthetic limbs. This product facilitates muscular dystrophic patients or disabled person to control a mechanical device like prosthetic hand by just using their brain signals. The EEG and BCI are used for decoding the motion that user wants to generate and the mechanical part creates the required movements. Resulting in the feeling of a brain controlled prosthetic arm. The range of actions that can be generated is not unlimited like a natural limb; however basic functions of gripping, releasing and few others can be achieved. Much like driving of a car requires some basic training, as the user gets used to the equipment much better results can be achieved, with the prosthetic arm.
1.5 Economic Benefit
Pioneers as in the first mover in providing locally manufactured solutions Relatively to cheaper to its counterparts
1.6 Current or Potential Customers In the first stage our potential customers will be NGOs and government organizations, after that we will try reduce its cost so that my product can be easily purchased by individual customers.
1.7 Business Model The model is B2B (Business to Business).
1.8 Go to Market Strategy Develop working prototypes for disabled people who are registered with potential channel partners.
1.9 Our Team Two of the team members are electrical engineers, who built the first prototype. Another member has experience working on web development; he will be helping manage online presence of the company. Finally I will be assuming the role of CEO.
1.10 Risks and Mitigation Strategy We have classified our risk in two sections i.e.: I. II.
Failing to develop an ideal product for the product Not being able to build a cost efficient product
The solution for the first risk would be investing more in R&D and for the later looking into ways for reducing cost of production.
1.11 Future Milestones We wish to make our self a name in the international market. We want to be the synonyms for providing cheap affordable solutions to the disable.
1.12 Financials
Brain Controlled Prosthetic Hand Headset with 1 Accessorise *For indiviual use and Windows Supported
Headset Software
$399 $300
2 Single Board Computer Prosthetic Hand with 3 Accessories 4 Microcontroller 5 Miscellaneous Shipping Freight and 6 Duty
$300 $150 $22 $28
Total ($) Total (PKR)
$100 $1,299 Rs: 130,000/-
Note: Software (SDK) needed to buy for the first time only then our product cost will reduce by $300
**Selling price will be 200,000 after including of all expenses
1.13 Exit Strategy In case if the product doesn’t clicks in the market. We would try to sell it out to our competitors.
Chapter # 2:
Company Information 2.1 Company Description When I created brain masters, we set out to design a Brain Computer Interface (BCI) which will able to control any mechanical (prosthetic hand or wheel chair) or electronic (laptops) stuff. With all my research work in process I was surprised to learn that full prosthetic arms were not as common as how the media and news articles portrayed them in laboratory experiments. It turns out that upper extremity prosthetic development is severely behind that of lower extremity prosthetics. This Major Qualifying Project has served as an exploration in researching the current state of prosthetic arms and hands, and ultimately coming up with a new design for a prosthetic hand which is designed to bridge the gap somewhere between simple prosthetic hooks, and expensive uncommonly used robotic prosthetic hands. There are over an estimated 100,000 upper extremity amputees currently living in the Pakistan alone. (HOPE Center, 2014) Many of those people could benefit from the psychological gains and physical usefulness of a simple powered prosthesis. It is a sad fact that people who are viewed as “different” in our society stand out, but those people simply want to blend in and be treated normally, and be able to lead normal high functioning lives. Amputees are strong and capable people, who make do with what they have, and are able to overcome adversity. There is room for improvement in all aspects of current prosthetic technology relating to mechanical design, electrical signal processing, and overall system performance. There are not a large number of major companies developing competing products because the market is still quite small and limited from a business perspective. This leads my company “brain masters” to take mechanical advantage with BCI that we had developed with our 4 years of extreme research work and develop a fully brain controlled prosthetic hand that could transform the lives of amputees worldwide, and help them regain a new level of independence and control. This prosthetic hand is the culmination of many years of development and is the most lifelike, functional, affordable and easy-to-use, commercially available prosthetic hand. We worked closely with amputees at every stage of development and testing, taking their input to design prosthetic hand to work effectively in real life situations. Brain Controlled prosthetic hand utilizes leading-edge technology and unique, ergonomic features that make it unlike any other hand available. It’s sleek, innovative design and advanced construction materials make this prosthetic hand strong enough to stand up to the wear and tear of everyday use. These innovations combine to give the hand unrivalled versatility, functionality and performance.
2.1.1 Product Market With our market survey of 6 months we first tried to sell our product directly to our customers but as it is an medical product every customer ask for doctors’ advice to choose our product, even when we were trying to target directly disabled persons customers we failed because they were quite uncomfortable and behave that we are joking with them, so with our team research work we had choose our business model to be Business to business (B2B), in this way our every customer will choose our product with the good will of doctor and hospital. As we will gain confidence of our worthy customers and our product will have its own good will, then we can establish our own rehabilitation center that will utilize customer’s confidence on our product.
2.1.2 Product Industry At the start, complete upper arm prosthetics as a whole were strongly considered. There is essentially no product on the market today which resembles a complete functional prosthetic arm. There are several companies that produced complete static arms. The marketplace essentially has huge room for a fully functional complete upper or lower arm prosthetic device. Since 2007, the United States military began expressing interest in revolutionizing prosthetic devices to give wounded soldiers replacement limbs. Many soldiers were injured on the battlefield from improvised explosive devices and landmines. Commonly those soldiers would lose limbs directly or require amputation from shrapnel damage. The military had the budget to help wounded soldiers who had given their limbs fighting for their country. It was clear that lower extremity prosthetics were functional and readily available, but upper extremity prosthetics that essentially not advanced since the Civil War. Most people simply made do with what they had when it came to having an arm amputation. Several soldiers however even loss both of their arms and tragedies and it was clear that something needed to be done for them. (Adee, 2008), with huge advancement internationally Pakistan is also trying to make rehabilitation centers that had been practiced internationally.
DARPA or the defense advanced research projects agency, decided to make a huge investment in upper extremity prosthetic limbs. They chose a two-pronged effort by awarding multiyear contracts to Johns Hopkins University Applied Physics Laboratory and DEKA research led by Dean Kamen. Essentially, DARPA has
completely solved the problem of building the most advanced robotic humanoid arms possible. Figures 2 and 3 show functional prototypes of the APL and Luke arms ready for testing. The arms can perform almost any task a human can. The only downside to the arms is there cost. The
APL arm was a $100 million dollar project, and the DEKA arm was a $20 million dollar project. (Dillow, 2011) Products have not been produced, laboratory prototypes have been produced. These arms were not designed with mass production and market pricing in mind. As our product not cost million dollars like other companies who are manufacturing these kind of product internationally. With all the research work we had done for our product industry we concluded that it will lead to a huge advancement in locally manufactured prosthetic limbs as there is a huge market need of such a revolutionary product nationally and internationally. As we have got only static prosthetic limb sellers as our only local competitors. Which create a huge market space for our product, as our product will reshape lives’ of every disable person.
2.1.3 Company strengths and Core competencies One of the major strength of my company is my team who build brain master together, my team members include highly trained professional founders with strong technical background of electrical engineers and it is not only a business idea because we have been working with its practical business model since 6 months and now we are making our way to the market by meeting Rehabilitation center of Lahore like HOPE which is helping and guiding us about the practical needs of a disabled person and to easily make our space in prosthetic limb industry. With our collaboration with Brig Dr. Pasha who is leading a prosthetic center in CMH Lahore, this will lead our company to get collaboration with Army rehabilitation centers.
2.1.4
Business Model
Our business model is B2B (Business 2 Business) in which we are going to approach Hospitals, NGOs and Rehabilitation Centers as our potential customers.
2.1.5
Achievements
Our product has won many national business models like Clash of titans organized by University Of Central Punjab Lahore; this achievement led us to make our own company of brain masters.
2.1.6 Legal form of Ownership Form of ownership of Brain Master is a partnership because my all team member are founders so all of us have equal rights in my company.
2.2 Products and Services While manufacturing we have made our product user friendly that will be just we call it plug and play device. Mechanical Prosthetic Hand structure will be safe to use and handle during operation. There will be covers or a shell over all components for protection from common impacts, Attachment locations will include currently used standard universal socket methods. Batteries will be easily swappable or rechargeable with 1 hand and no additional tools.
Details: Human Form Factor/Appearance
Will resemble the general form of an adult human hand Entire hand will weigh 450g including self-contained power and control Hand will consist of 6 DOF, 5 individually actuated fingers, plus thumb roll
Mechanical Power/Speed
Hand will have 15 lbs cylindrical grip force Fingers will be able to travel from fully opened to fully closed in 1 second or less System will last at least 2 hours under continual use, and idle operation of at least 12 hours.
Control and Sensor Integration
Fingers will contain at a minimum 1 analog force sensor per finger. Each joint will have analog position feedback throughout the range of motion (rotary potentiometer or encoder). Each joint will utilize commercial off the shelf electronic speed controllers. There will be a commonly available standard microprocessor able to handle sensor inputs and motor outputs, for example an Arduino Mega or equivalent.
Safety/Failsafe Conditions
If input control signal is lost, all actuators and motion will stop. If the battery is running low, the LEDs will signal the user for recharging. The hand will not be able to destroy itself, all actuators will have software and mechanical limits to prevent unwanted motion at joint limits.
2.2.1 Pricing/ Fee Structure
Brain Controlled Prosthetic Hand Headset with 1 Accessorise *For indiviual use and Windows Supported
Headset Software
$399 $300
2 Single Board Computer Prosthetic Hand with 3 Accessories 4 Microcontroller 5 Miscellaneous Shipping Freight and 6 Duty
$300 $150 $22 $28
Total ($) Total (PKR)
$100 $1,299 Rs: 130,000/-
Note: Software (SDK) needed to buy for the first time only then our product cost will reduce by $300
**Selling price will be 200,000 after including of all expenses
2.3 Marketing Analysis Currently, Pakistan has about 400,000 of upper extremity amputees without their entire arm (HOPE, 2014) these figure are those people who are addressable/ they can afford a reliable product by there self or by any NGO. It is estimated that 6000 new upper extremity amputees arise every year in Pakistan due to events like trauma, congenital anomalies, illnesses and war (PSRD, 2013). Wars in Iraq and Afghanistan have increased this amount, to about 186 people with arm loss up till February 2009 (Kuniholm, 2009). This has also fueled military expenses on prostheses from around $529,000 in 2000 to $1.1 million in 2006 and will continue to increase (Biomedicine, 2007). As a result, there is an increased demand for prosthetics with the growing market needs. Myoelectric prosthetic are generally inadequate in their function for trans humeral (above-elbow) amputees. For instance, the existing arms provide only closing and opening of the hand (Miller, 2009) and they lack of sensation feedback from the prosthetic (Swoyer, 2009). Consequently, with limited functionality in these prostheses, patients want a good prosthetic hand with more functionality and less cost. In our product cost is a big advantage among all of our competitors’. 2.3.1 Market Size
Pakistan Disabled Persons
Mental Disability (40%) Hearing Impairment (10%) Visual Impairment (20%) Physical Disability (40%) Overlapping (10%)
Over 12 miilion of Pakistan population are suffering from Disability
Other Disability (8 Million) Other Physical Disability (2.5 Million) Addressable Arm Disabled (0.7 Million) Non- Addressable Physical Disabled (0.9 Million)
Source: Oracle Research & Information Services. Country Profile Study on Persons with Disabilities.
2.3.2 Products / Services In the first stage we are just considering our only one product which is a artificial prosthetic limb but as we penetrate in the market then we will launch our next stage which is providing a fully controlled wheel chair which will also be controlled by brain signals. For three months we will sell our product with money back guarantee and when we will gain good relationship with our customers then we will just provide after sales for one month. That will insure a good will with our worthy customers.
2.3.3 Competition Direct competition with companies who make non-movement based prosthetic limbs. This product facilitates muscular dystrophic patients or disabled person to control a mechanical device like prosthetic hand by just using their brain signals. The EEG and BCI are used for decoding the motion that user wants to generate and the mechanical part creates the required movements. Resulting in the feeling of a brain controlled prosthetic arm. The range of actions that can be
generated is not unlimited like a natural limb; however basic functions of gripping, releasing and few others can be achieved. Much like driving of a car requires some basic training, as the user gets used to the equipment much better results can be achieved, with the prosthetic arm.
2.3.4 Niche Our market would be BCI systems providing company and I am sure with my all research that I had a room in international and local market.
Chapter # 3:
Strategy & Plans 3.1 Overall Strategy We will rent a business space in Lahore city. This facility will house most of our business processes including R&D, sales, marketing and manufacturing. Brain Masters (BM) will be operating from 8 am to 6 pm Pakistan Standard Time Monday through Saturday (Friday prayer break for 1 hour). This location will be equipped with all standard business equipment. This includes desks, meeting rooms, computer equipment, and phones, fax machines and the like. In addition to this, the facility will include lab space housing the high-tech instruments necessary. The facility will have a designated area for assembly of the arm and testing of it. All equipment necessary for those processes will be included in this area. A small storeroom for inventory will also be present.
3.2 Marketing Strategy Brain Masters intends to sell and distribute BM prosthetic arms to active upper extremity amputees with collaboration with NGOs, Hospitals and Rehabilitation Centers. In order achieve this goal, brain masters will need to market to Prosthetics. Last but not least, we will be targeting our end-users as well for our advertising. Together, this will form our multi-faceted approach in promoting and generating demand for Brain Masters Arm. Initially, to increase awareness among the targeted healthcare professionals, BM (Brain Masters) intends to publicize BM Arm through the media. BM will get registered on online information portals like facebook and twitter etc, to provide prosthetic professionals and amputees with product. Publications in established scholarly journals like Scientific American, or “inMotion” (ACA, 2009), help to increase the scientific credibility of our product and build up its reputation. BM intends to apply for Pakistan valuable national and international accreditations by organization such as the Pakistan Orthotic and Prosthetics. With these accreditations, BM would be able to gain product credibility amongst the PPOs and VA.
BM will also participate in prominent prosthetic related trade shows. For instance we will show the product to prosthetics professionals hands-on demonstrations to illustrate its benefits. In order to increase awareness to the end-users, BM intends to utilize Social marketing in the first stage while placing posters in Rehabilitation centers and Hospitals associated with us. After generating interest, BM intends to send representatives to targeted VAs and PPOs Prosthetics. These representatives will bring materials such as the BM Arm prosthetic arm, demo DVDs and educational brochures. This allows them to see how the arm works, and let them realize its advantages as opposed to the existing alternatives. Our next step would be providing training and educational programs for the Prosthetics and surgeons. Surgeons will participate in training of the TNR surgery for BM Arm. They will attend sponsored on-site TNR training. Led by our team of educators, BM will host technical workshop for Prosthetics, which will teach them how to fit and train patients on the use of BM Arm. This will acquaint the professionals with the benefits of our products and helped to act as a medium to relate this information to the end-user.
3.2.1 Pricing Strategy Price will be the major factor in choosing our product, as our product will be least expensive among local and international manufacturers. This will engage many local and international customers.
3.3 Sales Strategy BM will be selling prosthetic arm BM Arm to major organizations like Hospitals (Surgimed Hospital, Lahore), NGO (HOPE) and other Rehabilitation Center of Pakistan. Because its difficult to sell our product without doctors / professionals advice. BM will try to reach the Prosthetics all over Pakistan The price for BM Arm would be a fixed price. This fixed price is estimated to be about Rs: 200,000/- per unit. Marketing efforts will be used to educate and entice Prosthetics to use and purchase BM Arm. Collaborations with NGOs, Hospitals and Rehabilitation Center is important to our sales strategy as it creates a barrier of entry to other competitors. BM will focus on becoming the prominent prosthetic arm supplier to the VA based on its marketing strategies.
To reach the Prosthetics in PPO providers, BM will get BM Arm incorporated into select PPO coverage plans. This will allow patients belonging to that PPO plan to be reimbursed for BM Arm. As stated earlier, Prosthetics will want to purchase BM Arm for their patients due to the benefits BM Arm has not only for the patients, but also reduce hassle for the Prosthetics. By incorporating BM Arm into the coverage of PPO’s, this gives BM an advantage of the fact that we can sell our product to every Prosthetics in the network of the PPO. For example, HOPE has over 300 Prosthetics in Lahore alone, (HOPE, 2014). If every Prosthetics purchase just 1 unit of BM Arm per year and we extrapolate this to the entirePakistan, we will be well able to meet our target market sales. In addition, this gives us a competitive advantage against other products that have not been covered by PPO’s in this manner. To maintain these sales efforts, BM will be employing two sales people who are highly accomplished at selling medical devices in total. These employees will be supplemented by sales efforts by the officers, especially the CEO and the CMO. The training of the sales people will include a complete understanding of BM and its product. The sales people will be trained in how to show the client a value proposition that benefits the client. Compensation for our sales force will include a competitive salary. We will also offer an incentive program in which BM will give extra commission after meeting sales target. Proactive sales person will be judged based on multiple performance analyses. This allows the sales person to stay motivated.
3.4 Operational Plan Summary Brain Masters will be manufacturing of mechanical assembly and electronics of our BM Arm. However, we will also set-up in-house assembly and R&D facilities. The reason for manufacturing locally is that Brain Masters will be able to reduce the initial cost of setting up the manufacturing unit, and also enjoy the flexibility to make changes to the BM Arm in with the progress in ongoing research. Additionally, outsourcing allows Brain Masters to benefit from the economies of scale of those manufacturers and eliminate the costs involved in the production and maintenance of the facilities. Brain Masters’s in-house assembly will be setup for two primary reasons. First, it helps us to maintain quality control of BM Arm and provide customization to the customers. Secondly, it also helps to protect the intelligent properties and information of the licensed technologies. Setting up in-house R&D allows us to improve BM Arm by trying to add additional functionalities. We will also be able to preempt possible bugs that may occur in the future. Thus,
in-house processes will help us to create a barrier of entry to our competitors as they will have to go through the same learning curve if they were to try and catch up to us.
3.4.1 New Business Developments A value adding operations to Brain Masters will be our Sales and Marketing. These will add value to Brain Masters by finding new streams of revenue for the company. Day-to-day operations of Sales and Marketing will include building new relationships with physicians and hospitals. This will allow Brain Masters to continue to gain more contracts with physicians and hospitals and also increase the awareness of BM Arm in the professional community. In addition, our Sales and marketing team will be on a continuous look out for an untapped customer market which may expand our business model and bring in more revenues.
3.5 Management plan summary
CEO MANSOOR KARIM MANS
CTO SYED MUHAMMAD FURQAN
COO AHMED PASHA
ADVISORS
CMO NAUMAN MIR
CTO / CFO MUHAMMAD YASIR JAVED
CEO is responsible for key functions. He is the main person. All the team members will look into the business on a daily basis. All members have their own expertise which will be helpful for business to proliferate. All members are responsible for successful business. If these members are lost, we shall look for others with same competencies to grow business. We will continue our business. Team members should have some reliable financial source, able to take calculated risks. They need proper training about the business because with the expanding business new employees have to be hired and these employees require proper skill and expertise to help in accomplish corporate objectives.
3.6 Risks and Mitigation Plan Risk always has a major part in business. It may positively or negatively impact the business, but it depends on the business personnel how they take risks. Risk should be calculated and we should take risks because there is a saying, “Fortune favors the brave.” We have to take a look on the market about the product we are launching, that there are how many vendors of the same product and at what price they are selling. Innovation in technology also hurts business because the product gets outdated. Fluctuation in currency also has an impact on the business because the exporters and importers define new rates which directly influence consumers. Change in government regulations impact the business when government defines new tax rates. We have to consider all these situations at the beginning.
3.7 Strategic Alliances Brain Masters will carry the governing body of his 5 members that are competent and specialized in their respective tasks .How ever for the betterment of our business in the future we are looking forward to form a Board of Advisors, that will consist of individuals who will provide consultative/advisory duties and will also be critical in the success of Brain Masters. The Board of Advisors will advise the management team in making decisions and adding value to the company. The following are the personals that would be considered as tentative members of the Board of
Advisers: • Ali Mansoor Khawaja, – Mr. Khawaja has been running his own business since a year, he would be advising us in sorting out the manufacturing financial matters. He is highly competent in business management and financial affairs. • Ali Faisal Murtaza, Ph.D – Dr. Faisal is currently an Assistant Professor at the University of Central Punjab for the subjects of Embedded systems, and Micro –Controller programming. He has much experience in ICs and Actuator synchronization. He will be our technical advisor. •Col ® Sikandar Qayyum– Col. Sikandar is a Professor of at the University of Central Punjab beside that he has certain links with government officials and lawyers. He will be crucial in providing insight into ethical, legal connections Brain Masters might need to take into account.
3.8 Milestones We have participated in various National Competition in which the remarkable ones are Clash of Titans @ UCP and ASME @ UET KSK. Now are in contact with Surgimed hospital and Hope Center Lahore for the penetration in market.
3.9 Financial Plan Summary To accomplish Brain Masters’s goals, The company has planned its development strategy into two phases. In order to ensure that these two phases are successful and these goals are met, The company has determined the necessary expenses that it expects to incur and these are highlighted below. These estimates will help the company determine start-up costs and in turn assist with determining the amount of external funding needed in order to remain cash flow positive over the first five years of operations. Phase 1: Research and Development The focus in this phase is to research and develop the most advanced prosthetic limb. Brain Masters’ team consists of integration and Electrical Engineers. Approximately 70% of R&D expenses would be the salaries of the R&D team of five employees to be hired. The increase in R&D expenses over the first five years (PKR 100,000) will come mainly from the compensation in salaries of this team as well as the addition of staff as production is increased.
The company will reinvest profits into R&D to make BM Arm more cost-effective as the initial production costs will be relatively high compared to the expected costs when producing at maximum capacity. It is also important to note here that R&D expenses will make up about 8% of the total operating expenses. The company also plans to license various technologies from John Hopkins and DEKA. . Phases 2: Government and the Private Sector In is this phase; Brain Masters will raise awareness for its products. In the 2nd year of operations, The company plans to set aside a budget of PKR.150,000 for the initial marketing and advertising campaign which involves publications in popular journals and other initiatives mentioned in our marketing strategy segment. In the third year, The company will pursue a more aggressive marketing campaign with a budget of PKR.300, 000 in preparation for BM Arm to enter the Private Sector of the South-Asian market. At this time the company will proceed to market directly to targeted PPOs and initiate an informational awareness campaign for Prosthetics and physicians. By the fifth year, The Company plans to implement a corporate sponsorship plan, which involves sponsoring of the Paralympics events as well as other highly visible charity events, which will Increase the marketing budget to PKR.1,000,000. Operating expenses will further increase in Years 3 to 5 as costs in sales and marketing increase from PKR.800,000 to PKR.2 million. This is mainly due to the compensation in salaries and addition of personnel to the sales and marketing staff. Technical Support assistance will be available starting from Year 3 onwards as we make our initial sales. Given the sharp increase in the amount of prosthetic arms we will be selling from Year 4 to Year 5 (900 units to 1800 units), we estimate an increase of technical support expenses from PKR.50,000 to PKR.100,000. General and Administration (G&A) Expenses for the first five years will cover operations such as rental of the facilities and equipment as well as product insurance, A conservative estimate of 5% of unit sales used which will be about PKR.7 million in year 5 when BM produces at full scale production for 800 total units at PKR.80,000 per unit. These royalties account for approximately 50% of total operating costs.
3.10 Exit Strategy Brain masters is confident that this will cover the start-up costs until the company is able to realize the first sources of revenue in year 3 and also allow the company to maintain sustainable
growth for years 4 and 5 when production is expected to increase. With this level of plans and sources, Brain Masters expects to break-even in year 3 with just 150 units sold. If under same uncertain circumstances, we have an exit strategy that can be made using any of the following processes of conduct:
Liquidation Friendly Sale Mergers and Acquisitions IPO
APPENDIX Appendix A1: Cashflow Chart CASHFLOW STATEMENT BEGIN YEAR 1
YEAR 2
YEAR 3
OPERATING ACTIVITIES Net Earnings Depreciation Working Capital Changes Increase / Decrease Accounts Receivable Increase / Decrease Inventories Increase / Decrease Other Current Assets Increase / Decrease Accts Pay & Accrd Expenses Increase / Decrease Other Current Liab
2,398,017 122,857
2,998,017 125,000
3,502,012 127,143
0 0 0 69,839 0
0 0 0 2,286 0
0 0 0 99,856 404,000
Net Cash Provided By Operatiing Axtivities
2,205,321
2,870,731
2,871,013
860,000
15,000
15,000
860,000
15,000
15,000
0 0 0 0 0 0 0
0 0 0 0 0 0 0
0 0 0 0 0 0 0
INVESTING ACTIVITIES Plant & Equipment Other Net Cash Used in Investing Activities
FINANCING ACTIVITIES Increase / Decrease Short term Debt Increase / Decrease Curr. Portion Ltd Increase / Decrease Long Term Debt Increase / Decrease Preferred Stock Increase / Decrease Common Stock Dividends Declared Net Cash Provided / Used by Financing
INCREASE / DECREASE IN CASH
3,065,321 2,885,731 2,886,013
CASH AT BEGINNING OF YEAR CASH AT END OF YEAR
0 3,065,321 5,951,195 3,065,321 5,951,052 8,837,208
Appendix B1: Diagram of the business model illustration its value chain
Sales & Marketing
Education & Certification
Research & Development
Post-Servicing
Assembly of Prosthetic Component s
Quality Control On Prosthetic Arms
VIP NETWORK OF CUSTOMER / PATIENTS CARE, HOSPITALS TO END USERS
REFERENCES
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(2009) Hanson Robotics. Retrieved from http://www.hansonrobotics.com/innovations.html (2009) Miraj Corp. Retrieved from http://www.mirajcorp.com
(2009) Far East Resources, Inc http://www.fareastpcb.com HOPE NGO, www.hope.org.pk Disability Framework in Pakistan (2009) Ivan R. Sabel. Forbes.com. Retrieved from: http://people.forbes.com/profile/ivanr-sabel/39241 (2009). Entrepreneurship Faculty School of Engineering and Applied Sciences, University of Pennsylvania Retrieved from: http://www.seas.upenn.edu/entrepreneurship/faculty.php (2009). Dr Stuart Harshbarger. McGill University. Retrieved
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