Our strategy is for the business to be established as a Public Limited Company (PLC). There will be four chief officers within the company - the four founding business partners, each of whom will provide a degree of expertise in a range of fields. The intention is, once the business has generated initial revenues, to reinvest some of this early cash flow to bring in experts at a later stage to aid in the growth, expansion and recognition of the business.
A PLC in Ireland must be registered under the Companies Acts 1963 - 1990. It requires at least two people to set it up and a minimum of seven shareholders, along with a minimum capital of €38,092, 25% of which must be paid up. A PLC has limited liability, which means that as directors of the company, we do not risk our personal possessions by being part of the company should it run into financial difficulty. A PLC is not subject to the restrictions that apply to a private limited company, which is restricted as regards the right to transfer its shares, limitations on the number of its members to 50 and prohibition of any public subscription to shares or debentures. For these reasons we have chosen to register our business as a PLC.
By submitting its Memorandum and Articles of Association to the Registrar of Companies along with the registration fee, a company's formation is officially recognised. Two directors and a secretary are required, none of whom must be Irish (Law and tax news website, 2010)
Company accounts must be filed each year to the Companies Registration Office. They may also be subject to audits depending on the requirements set out by their bank manager. If turnover is below a certain amount, audits are not legally required. (IDA Ireland Website 2010).
Since 2000, a requirement has been put in place which states that Irish business' must have at least one resident director, or alternatively they must deposit an insurance bond with the Registrar.
Business Set-up Requirements:
There are various items which need to be considered for starting our business. We have consulted a number of resources in our investigation of the set-up requirements for our business. Websites of Irish organisations specialising in assisting small companies in their early stages, such as Teagasc (Teagasc website, 2010) and Enterprise Ireland (Enterprise Ireland website 2010), as well as books on getting started in business, have been particularly useful.
First of all we need to register the business as a public limited company, which involves paying a fee to the Registrar of Companies. We also need to apply for a patent for our product so as to ensure that our idea for Brake-Safe cannot be copied by a rival company (Allen, 2007). We then need to develop a prototype of the product and manufacturing blueprints so as to highlight any issues with its manufacture. We also need to compile the Memorandum of Association and Articles of Association for our company, as these documents are required when registering a business with the Registrar of Companies (Robson, 1995).
We have decided to outsource the manufacturing of our product to a third party so as to avoid unnecessary additional costs. This means that we do not need to invest in any manufacturing equipment (Boguslauskas and Kvedaraviciene, 2008). We have also decided to operate our business from the home of one of our team members who lives in a central location in Dublin. We need to establish trading terms with both our suppliers and our customers.
We also require a small commercial vehicle for the purposes of transport to meet with suppliers and transport the product. We plan to sell our product through existing retailers and also via an online store facility on our company website. We will pay a professional website designer to do this for us so as to promote our company in the best possible way. We feel that in today's modern society, it is essential for our company to have an online presence so as to reach the maximum number of target customers in an effective manner. We have set a promotion and advertising budget to ensure that our product gains as much attention and exposure as possible.
We will require outside assistance from some third parties. As a PLC, our company must submit annual accounts to the Companies Registration Office (O'Kane, 1995). We will need to have an efficient accounting system within our company to keep records of day-to-day business transactions. We will require the services of an external accountant to ensure that our annual accounts are properly completed and in accordance with Irish company law. (Companies Acts 1963-1990). We will also require the services of a solicitor for our company to assist us with any legal matters which may arise. We also need to sort out administrative issues within the company, such as setting up a company bank account by meeting with a bank manager (AIB website, 2010), setting up a system for wages and salaries, company stationary, etc. (Rhodes, 1995).
Further details of all of our business set-up requirements are set out below. This explains the expected start-up costs for the business in its first year. As can be seen from this, we have also set aside a portion of our start-up budget for unanticipated business expenses which may occur unexpectedly in the early days of the company. This section contains further details of the costs associated with the start-up requirements of our business. It should be noted at this point that as our product is still in early design stage, projections regarding manufacturing are estimates and therefore may not be entirely accurate. Start-up costs will be financed through collective personal savings and private investment totalling €80,000.
€10,000 is allocated to professional design consultation and the production of a product prototype and the manufacturing blueprints. Rudimentary prototypes were used in determining the viability of the product thus far. Professional consultation is necessary to produce a marketable prototype and produce technical drawing to industry standards.
€20,000 is allocated toward the manufacture of 2,000 units of stock with provisions for increased production as sales increase. We will not be manufacturing the product in house and as such will not be buying any production equipment or renting a manufacturing facility. Instead we will be subcontracting production to a third party who will manufacture the product. This will negatively affect our profit margins but will greatly reduce our start-up costs and allow us to get the product to market as fast as possible. As we do not currently have a working prototype for the finished product we will be estimating manufacturing costs through a process of comparison with existing products. By selecting a range of current products of equal complexity and material content to our proposed product, and ascertaining the cost of their manufacture, we were able to arrive at a reasonable projection of the production costs for our product.
€15,000 is allocated toward an effective promotion and advertising campaign including web based advertising.
Inventory will initially be stored privately by company owners. Due to the volume required to store the initial inventory levels a dedicated warehouse facility would not be economically viable.
Product will be distributed to retail outlets using a long wheel-base vehicle. €10,000 is provided for the acquisition of a suitable vehicle and the related tax and insurance expenses.
Web Site Design:
Our company's online presence will be achieved through the launch of a professionally designed web site. €2,500 is allocated to the design of a professional and user friendly interface to present our product to the online consumer.
A provision of €10,000 is made to account for any unforeseen expenses arising during the beginning of the business. Subsequent to the first two months of business, revenue streams generated will be used for the acquisition of more stock as necessary and the continuation and growth of our promotion and advertising campaigns. As sales increase, we may consider increasing our logistical capacity and perhaps outsourcing some or all of this area of our business.
Location and Premises:
We have decided to operate our company from the home of one of our management team members in the early stages of the business. His home is in a central location in Dublin, Ireland and so is ideally situated as the centre of our company. We feel that we do not require the use of other office or warehouse space due to the nature of our product. This will also help in keeping business start-up costs as low as possible as we will not incur expenses which would be associated with office or warehouse space, such as light and heat, telephone, rent and rates and insurance. This is our decision for the early days of the business. However, should we wish to expand the business at some stage in the future, we may then require the use of extra space. We could then look at the possibility of renting an office and/or warehouse space if necessary.
Under Irish Company Law, if we wish to operate as a PLC, we are required to register with the Registrar of Companies. This involves submitting the Memorandum of Association and Articles of Association of the company to the Registrar, along with a fee (Companies Acts, 1963-1990). All PLCs are also required to submit their annual accounts to the Companies Registration Office (Revenue Commissioner's website, 2010). We will pay an external accountant to prepare our annual accounts for us but will oversee day-to-day transactions and associated paperwork ourselves. Our company may be subject to audits if our bank manager insists on it, otherwise our annual turnover does not exceed the limits over which audits are necessary (Companies Acts, 1963-1990). There are also procedures to follow in relation to selling shares (O'Kane, 1995). In terms of insurance, we are not legally obliged to pay most of the insurance premiums normally associated with a company, as we plan to operate from the home of one of our management team. We do need to insure the commercial vehicle that we have decided to purchase. If we decide to expand the business in the future, we may then be required to pay insurance on office or warehouse space, particularly public liability insurance.
All PLCs operating in Ireland are subject to Corporation Tax at a rate of 12.5% on trading profits (Revenure Commissioner's website, 2010). As well as this, all companies are legally obliged to pay tax for each employee to the Revenue Commissioner. For each employee, we must pay Pay Related Social Insurance (PRSI) depending on the amount of their wages (Citizens Information website, 2010). We must also deduct Pay As You Earn (PAYE) from the wages of each eligible employee at rates of 20% and 41%, depending on their level of income. Deductions are payable to the Revenue Commissioner and we must also keep records of all deductions made from employees' wages. We must issue all employees with a P60 form at the end of each tax year, detailing the tax payments made by the employee during that year (Employer's Guide to PAYE, 2009). However, a 25% tax credit can be claimed against qualifying Research and Development (R&D) expenditure by Irish companies within the European Economic Area (EEA). This grants companies some flexibility where their corporation tax liability is insufficient to claim tax credit from the revenue commissioners over three accounting periods. The R&D tax credit can be claimed against 'qualifying buildings' which are buildings with a minimum R&D usage of 35% over a 4-year period. Any R&D work which is sub-contracted to third parties also qualifies for the credit, up to a maximum of 10% of the company's qualifying R&D expenditure in any one year. A total of 5% of R&D expenditure can also be outsourced to European universities (IDA Ireland website, 2010).
Manufacture and Production:
Assessing the production and operations needs and requirements for the business is a complex process. For our business, this process involves sourcing raw materials, installing in house production capabilities and arranging for parts to be outsourced by other vendors. The primary material used in the manufacturing process would be aluminium. Transportation of raw materials to and from our business premises must be arranged with a haulage company
Component manufacturing would be outsourced to other business initially, with product design and assembly taking place on our business premises. Components would involve all materials, metals, screws and levers that would be incorporated into the design. Our own employees would make any necessary adaptations to the product's aesthetics during assembly though an automated assembly line process. After having established the business further, we would aim to put in place our own manufacturing plant, where brakes would be manufactured using the method detailed below.
Our product comprises a normally engaged dead man's brake. The manufacturing process involves a brake pad comprising a base and a friction part. It is manufactured by sintering two layers of powder of differing composition pressed in a single pre-form.
The brake pads are commonly formed by a part made of friction material and a metal base. In general, the friction material is pre-formed in a press, after it has been mixed with an appropriate material in the form of metal powder (copper, iron, bronze) to obtain the so-called pre-form.
This is applied to the base, previously coated with an appropriate material that will be able to guarantee bonding of the two parts on the side on which the pre-form will be applied. Grinding and branding of the pad on the side of the friction material complete the process; in particular, grinding is rendered necessary to prevent any deformation that the pad undergoes during the step of baking in the oven.
It would be desirable to be able to produce brake pads by means of a simpler and more economical process with a smaller number of operations, which will guarantee an end product that possesses strong, durable resistance.
Making brake pads comprises the following operations: - the setting in a mould of appropriate form, a layer made of sinterable material having a composition suitable for constituting the base of a brake pad and of at least one layer made of sinterable material in the form of powder having a composition suitable for constituting, once sintered, the friction part of said pad; - pressing of the material introduced in said mould ; and - baking of the material at an adequate temperature to bring about sintering of the material.
The material constituting the base can be of any appropriate type. It may be made of iron and carbon powder, with possible addition of other materials, such as, for example, copper. The same applies to the friction part, which may comprise, according to a possible example of embodiment, iron, graphite and copper, in addition to other materials, such as manganese oxide. It exhibits low wear, a high service life, a high damage tolerance and mainly a surprisingly high coefficient of friction.
Human Resource Requirements:
The four members of our management team will be employed by our company on a part-time basis. We feel that for the early days of the business, this will suffice in terms of human capital requirements, especially as manufacturing of our product is being outsourced. Each member of our management team is able to fulfill the required roles within the company: General Manager, head of the Human Resources and Public Relations functions, head of Finance and head of Business Relations. Employees of the company will receive a wage once the company has reached its breakeven point in terms of sales and associated costs. If we wish to expand the company in the future, we may need to recruit more employees.
In terms of skills, each member of our management team is highly skilled in their area of responsibility. However, further training and development in relation to running a successful business is required in order for our company to succeed. We will expand our knowledge of the business world by pooling our knowledge and continuously aiming for self-improvement in our skills base. As well as this, we will avail of training courses and funding available from associations in Ireland which assist businesses in their early days, such as County Enterprise Boards, which provide general support and assistance to new businesses in various regions in Ireland, in our case Dublin (Dublin County Enterprise Board website 2010) and the Small Firms Association, who run events to help small businesses manage their finances (Small Firms Association website 2010).
Quality and Environmental Controls:
Our head of Business Relations will maintain communication with the third party whom we will be outsourcing the manufacturing of our product to. We want to ensure that it is manufactured to the highest standards possible so that we can cater fully to the needs of our customers. As well as this, we must ensure that our product complies with all health and safety regulations Compulsory safety national standards are set out in Irish law, covering goods manufactured for use by children (National Standards Authority of Ireland website, 2010).
We believe that our company is capable of selling 20,000 units of our product in the first year of business. Thereafter we project a growth in sales each year of 15% to 20%. We have based these figures on data available from the Central Statistics Office (CSO). We have been able to estimate the number of potential customers for our product in Ireland by using this data. We plan to sell our product outside of Ireland at some stage in the future but we feel that it is better to concentrate on the domestic market for the early days of the business. According to the CSO, there were just under 65,000 births in 2006 and over 70,000 in 2007 (CSO 2006 and 2007). In 2008, this upward trend continued with over 75,000 births registered in the country (CSO 2008). Complete figures for 2009 are not yet available but this trend was expected to continue. These statistics indicate the number of children in Ireland who would be of an age that they would be using a pushchair, and therefore a part of our target market. In total we believe that we currently have a potential customer base of almost 300,000 children. Our projections of selling 20,000 units of our product in the first year of business represents selling our product to less than 10% of our target market in our first year, a figure we feel is very manageable.
Intellectual Property Issues:
In terms of intellectual property issues for our company, we plan to apply for a patent for our product as it is a unique idea. The concept behind our automatic braking system is one which is not currently copyrighted to our knowledge. We also plan to register our company under the name 'Globex Corp.'. Therefore we foresee no intellectual property issues with the operation of our company.
sources and costs for raw materials/other inputs
product: details of machinery, etc.
The synchronized 3 axes press-brakes HIDROGARNE model EPS are the latest in the market with the maximum in precision and trustworthiness.
All the vital functions of the machine like the folding parallelism, the angle of folding, the pressure and speed are controlled by the CNC thanks to a sophisticated system of proportionate cylinders and optical rulers.
We have installed optical rulers in the supporting arms of the framework. We guarantee a precision of up to +/-0.001 mm.
They have a standard throat depth of 400 mm.
We can independently adjust the parallelism of the Y1-Y2 axis to a maximum of 10mm. In order to avoid possible damage to the cylinders, we install ball-and-socket joints.
The EPS models includes CNC CYBELEC 63 PS8
Fast binding punch-carrier via intermediate clamps with anti-Deflection Wedges. Prometan punching system.
Include a standard 1010 punch and a 4 "V" mould with an auto-centred table.
Compact and silent hydraulic system of easy access (BOSCH-REXROTH or HOERBIGER)
Siemens electrical components. Include PLC. Adjustable control panel. Operation pedal. Electric system SIEMENScontrolled by a PLC. Moving command panel and electronic operation pedals.
Photoelectric level IV security barriers in the front.
Front and side protection.
It fulfils the current safety regulations of the CE.
http://www.lawandtax-news.com/html/ireland/jirlatcos.html (PLC & audits)