2014

Sunshine Hostel
Hostel Business Plan

This document contain the business plan to start the venture

who's core object is to provide accommodation for students and
working individuals.

Saadullah Arain, Nimra Abid, Saad Arain, Saeed Ahmed

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12/5/2014
 Sunshine Hostel
Akhuat Nagar
Airport Road Sukkur
Partners: Saad Arain, saadullah Arain, Nimra Abid, Saeed Ahmed.

Description of Business:
This business provide residential facility to students and working individuals, who
come across their city to Sukkur for conducting their business and find a place to
make stay. This business provides a service of room to stay, breakfast, lunch,
evening tea and snacks, and dinner in case of hunger, small library to do study,
common room for chat, and spots room. This business provide them a
accommodation for one, two or more days, or for months or years as per
requirement of individuals.

Financing:
To start this business we manage to collect 4 lac rupees by the contribution of
combined four partners. By using this amount we able to cover some of the initial
cost to start business and rest we able to manage by investors.

Confidentiality:
This report is confidential and is the property of the partners listed above. This
document is only dedicated for those persons to whom it is transmitted for use, and
conduct a legal action against those who use this document without the permission
from its owner.

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 Executive summary:

We the “The Sunshine Hostel” provides you the best facility in terms of
residence, convenient location, mouth watering food (not only 3 time meal but
evening snacks too), well furnished room, a laundry, TV lodge, a trendy
Sports room with all the facilities provided you to play the safe and healthy
games in a friendly atmosphere and a cool discussion room for study purpose
but despite offering all these bundle of facilities we charge you (the students)
a very nominal amount of RS 10,000 each.
We want to initiate this program because we observe the market gap by
conducting the research and surveys. By doing this research work we came to
know that despite of being an educational hub in interior Sindh, currently
Sukkur has no private hostel operating in her respective territory. So we found
this as window of opportunity and desire to grab it as it is open for a limited
period of time.
We will operate as a first mover so definitely we will be enjoying some
advantages. The main focus of our team will be on the students plus the
working class facing difficulties in their residence. We will offer them a room
having all the basic necessities at a very low price.
Initially we will rent a bungalow having 12 to 15 rooms. Each room will serve
4 students. But after operating 2 year in a respective field we will shift to
another bungalow having 20 to 30 rooms. Initially we will be facing loss as all
entrepreneur faces but we will reach on break even on 1.5 years and then
onwards INSHALLAH we will be enjoying profits because till then we would
recovered our fixed cost and other expenses.

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 Industry Analysis:
There are many hostel businesses operating in Pakistani cities, such as, Karachi,
Lahore, Islamabad and Hyderabad. As educational cites are increasing day by day
students from remote areas are moving towards these cities and most of
institutions are not providing accommodation facility to their student which cause a
main issue for student and working individual to find place to stay which is secure
and cheep also needed an environment where they do study peacefully and nobody
disturb them. Hostelling and house on rent are only options remain for students and
working individual but the high cost and incomplete faculties like meal cleanliness
and laundry are also create problems which they want to be addressed. To solve
these issues and problems there are many small scale Hostel businesses which are
working around Pakistan to serve their customers. As Sukkur is main city in
interior sindh and it become a hub for education like here is a medical college, an
engineering college, many business schools and many other institutes who provide
coaching for subjects and prep for entry tests. So students from other cities come
here and face problem to get good accommodation in reasonable prices. And there
is no any other source which can provide them all services including
accommodation, three times meal and laundry. So to facilitate them our team
wants to come forward and want to take advantage of the gap in this business in
Sukkur city by opening a Hostel.

Competitor analysis:

As we will be the first mover in this hostel business and there is no any strong
competitor exists in Sukkur city that provides same services. There are hotels,
guest house and flats on rent but as they only provide residence and charge high
amount for that. and other side they don’t provide quality meal services plus other
facilities such as, separate room for study, indoor games and a TV lounge where
all hostlers can gather our these services will keep our customer to remain in social
circle.

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Customer Analysis & Market Segmentation:

Our target audience is those students who study in different educational institute of
Sukkur city but their home or residence is outside of Sukkur. Those who cannot
go back to their hometown and have very poor options to live with limited
services. They want a accommodation where they can receive not just residence
but other services as such as, meal, laundry and social circle with other residence
and sports lounge for indoor games. And we will provide them all these service in
reasonable cost. we also want to target those working individual who travels from
cities to cities alone to conduct business especially women's who have difficulties
to live alone.

As we are the initiators so initially we focus on the limited customers or audience.

Basically we target the students of GMC, SALU, Dada-boy, Sistech and other
institutes which offer the entry test and also the working men or women. We are
the first mover means till now in Sukkur nobody own the private hostel with such
adorable facilities which we are offering at a very reasonable price with high
quality.
At start we have a limited market size but with the passage of time we grow and
increase our market size. We will manage our starting 2 years in a 15 room small
rented bungalow but after 2 years our revenues will increase so we will own our
own building in future which will consist of 20 to 30 rooms so that we can serve
more.

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 Description of venture:

Our mission statement is to provide quality accommodation for students and

working individual in a fun, secure, and good social environment. According to
this statement, our company's core product is to provide cheap hostel residency
especially for bachelor who have problems to live alone in strange places from
where they don’t feel familiar, and a lot of security issues concerns related to
staying alone far from home, especially for girls and working women who come
across their city and stay in hotels to conduct business activities in city which are
more expensive and having less security concerns, and also our religion doesn’t
allow our females to live alone in hotels which is also a big issue for females
autonomy, and above all hotels major problem is availability of less social
gathering . And by analyzing the need of market, we decided to provide hostel with
cheaper rate for the time of one night, two nights, one month or years, with
guaranteed security system. And we also provide the facility of common rooms to
increase the social gathering.

The location we choose is Akhuat Nagar which is less commercial area and helpful
for us to maintain the security issues which is highly concerns. We will get a large
size bungalow on rent and making sure the availability of electricity and gas meter,
telephone line and water supply line to decrease the cost of starting the business,
and good advantage of this place is that, it is near at Sukkur bypass which is
helpful for our customer to find us and it is also helpful for us to easily target large
market, for example: To attract the student of Dadabhoy, Mehran University
Khairpur Campus, Sistec etc.
Our office is situated in a hostel building where individual can booked the room
and we also provide a website of our business to find us and booking the room
online. And to achieve this we purchase the equipments (tables, chairs computers,
supplies, electronics, etc) for our budget.

Our company is entirely a new venture so we don’t have a history. The idea came
to our mind by seeing the need of hostels and places to make stay special for
women in our market, we gathered and had done some survey and interviews from
the current local hostel provider and find out certain problems there, by doing this
we recognize the market gap and to fill this gap we plan to enter in the market with
full packages of facility as per requirements of individuals.

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 Production Plan:

Our business is mainly based on services and do less concerns about production.
The part of the production we do is just about the manufacturing of meal for our
residence including breakfast, lunch, evening tea and snacks and diner. To make it
possible we will make contact with food and grocery suppliers to provide us a
ingredient which is necessary in making of food for our customers and later we
direct deliver the final product to our customer as per order.

Operational plan:

i) Duties and Qualification:

All four partner work together to perform the duties to run the hostel. The business
operates only on cash not on credit will be applicable. The business must require
the advance payment before any utilization of services, the advance payment must
be the half of the estimated cost of the finished costume. And the remaining
amount will be collected after the utilization, but it also depends upon company
terms and condition.

ii) Timing

The hostel hours of operation are open for whole week and the office is open from
08 am to 10PM, Within these usual hours there will be a lunch break tea break,
diner, and also the break for prayer.

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 Marketing plan:
As there are many other local small scale supplier available in the market who
provide rental services to their customers, so to attract the customer from them we
will use penetration strategy to set reasonable price to gain competitive advantage
from others.

Distribution:
We provide all the services including residence, meal, internet connection, study
room, common room, within the boundary of hostel and don't need any kind of
distribution channel to sell our service and product. In future we use exclusive
distribution in different cities.

Promotion:
Our promotion channels through we will advertise our business will be:

 Cable TV channel
 Pamphlets
 Word of mouth
 web site
 Face book

The market we targeted is around Sukkur areas, and our targeted audience will be
around educational institutes so will try to target them by distributing pamphlets
pen flaks outside of educational institutes (if they allow). We will speak with
institute’s management and offer delivers them our service message that how we
provide services to their students and how it will help to them. We will also use
cable TV channel for our promotion, we also use internet technology to give the
information of our existence for the customer out from the city .

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 Market Survey to Evaluate the demand of hostels:
We did some surveys to find out the size and demand for hostel in the market. to
do this we distributed online questionnaire in Suk-Iba email domain and also ask
some friends in face book, telephone, and current hostellers.

Along with it, we also ask the number of their family numbers in city, to know
about what want in hostel to let their children to live in hostel.

The questions which we asked from female were;

1. What facilities you want in hostels?

2. What is the current hostel condition around you?
3. what are the main problem you face in staying hostel?

Organizational plan:
Our company is based on partnership, as the nature of company describe, that it is
difficult for one person to invest and manage all the affairs alone, so we need some
extra hands to helps each other and support in different activities to increase the
possibility of making venture successful.
The main authority of our business belongs to Saad who give us a strategic
guideline to achieve our goals in future.

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Organizational chart:

Head
Manager

Maketing Financial Operational

Manager Manager Manager

Warden

Security Laundry
Cook Sweeper
Guard man

The head manager of our business is Saad Arain, who hold the major authority of
our business like signing the cheques, making the strategic goals etc, And rest of
three partners hold the position of Marketing Manager, Finance manager and
Operational manager by Nimra, Saadullah Arain and Saeed respectively.
Marketing manager holds the responsibilities like interpersonal skills, good oral
and written communication skills, numeracy and analytical ability, creativity and
imagination, influencing and negotiation skills, teamwork, organizational ability,
IT skills, business and commercial acumen, drive and ambition, responsibilities of
fiance manager includes, excellent interpersonal skills, team management
skills, problem solving, computer, decision making, future prediction,
analytical skills, accounting etc, and opertional manager needed to
perform the roles of, administration, communication, computer, conflict
resolution, creating relationships, customer service, decision making, fairness,
leadership, orientation, problem solving, recruiting, reference checking, teamwork.

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We also have some extra employees for cooking, security, cleaning the hostel, and
one for laundry.
So over all the our hostel has the tall organizational structure. At which will be
honored Saad to lead the business. Training session will be conducted on semi
annually bases as per the market trend.

Management team background

CV's saad,saadullah,nimra
saeed\CV_Saeed_Hussain_2014_12_05_09_47_08_585.pdf

CV's saad,saadullah,nimra saeed\Nimra_s_CV_2014_12_05_09_48_01_241.pdf

CV's saad,saadullah,nimra saeed\saad.arain CV.pdf

CV's saad,saadullah,nimra
saeed\Saadullah_CV_2014_12_05_09_43_50_850.pdf

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 Financial Plan:
Total investment in a business:
To run our business we able to manage the collection of 9 lac rupees, to fund our
business, from the ratio of equity is around 44% and debt ratio is 56%.

INVESTMENT
Saad Rs: 100000
Saadullah 100000
Nimra 100000
Saeed Hussain 100000
lender 500000
Total Rs: 900000

Estimated cost:
Estimated cost is divided in two portion fixed cost which cannot change
throughout the life. The variable cost which change in monthly base as a monthly
expenses, we estimated in a condition that there are 1 students in the hostel

fixed Cost
rent expence 100000
cook salary 13000
Cable tv 250
sweeper salary 5000
helper salary 5500
DSL/telephone 2400
Depritiation expence 10937.5
office boy/warden 16000
interest 8333

total fixed cost 61420.5

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total variable cost per person
Groceries 3333.333333
Electricity 1000
advertisement exp 600
Sui Gas 800
miscellaneous exp 266.6666667
fule exp 2000
total variable cost 8000

INCOME STAEMENT:
The income statement we have calculated is on monthly bases and and annually
bases for revenues we have assumed that rooms will be occupied by customer and
it is increase time to time. The variable cost we calculated on a monthly bases and
we have decided that we will recover our fixed cost In 1.8 years because the
estimated of 1st annual income statement result came in negative, that means we
got losses, and in next year we able to got positive result, and we estimated to
cover our fixed and variable amount in 1.8 years.

Breakeven Point Analysis:

Breakeven Point for 1st month:
Monthly Total Expenses Expected in 1st year

Variable Monthly Exp Rs: 8000

Fixed Monthly Exp Plus Interest Paid: Rs: = Rs:61420.5

Break even = Fixed/(Per price-Per variable cost)

Per price-Per variable cost = (10000-8000)

= 2000

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 Break even = Fixed/(Per price-Per variable

= 61420.5/2000 = 30.82337 Hostler Should Be Accommodated To

Reach Breakeven Point per month.

Breakeven Point for 1st year:

Break even = Fixed/(Per price-Per variable cost)

= (737049/(10000-2000))

= 379.967 hostler should be accommodated in 1st year to reach

breakeven point. but IN FIRST year we able provide accommodation for only 312
people which do not provide us enough funds to cover fixed cost at first year.

Breakeven Point for 2nd year:

Breakeven point for 3rd year remain same, and in 2nd year we able to
accommodate 381 customer, that is higher than the breakeven point.

Financial Statements:
financial material\financial sheet.xlsx

Assessment of risk:
Our company is just in a 1st stage, and we start our business by introducing in local
city (sukkur), because of few reasons from which the major issue is the
availability of security to our customers especially for women, from theft, politics,
and other unethical situation which may harm our customers physically and
mentally, second is we have less availability of finance , third we don't have
enough information to start in a large level, and forth we are risk aversive by
starting our business in sukkur we can decrease the chances of occurring greater
losses in case of shutdown the business if our idea doesn't work out.
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But to minimize these problem first we hire people those are tough and honest full
and those who have some contact with people who take take care of any un
favorable situation. We also make sure to save some amount to cover initial losses,
we also make good contact with diffident competitors to work together and help
each other in difficult situation.

Competitive Quality 1:
We offer quality service at a very affordable price and we also consider the
environmental elements which will suit our potential customers. The unique
qualities which will be offer by us are Room service round the clock, discussion
room, Sports room, Balcony access, conveniently located, near all colleges and
universities, mess facility, friendly atmosphere and much more.
Competitive Quality 2:
We have the 1st mover advantage because there are no such private hostels
operating their business in Sukkur city. So definitely this will be our competitive
quality. Due to this we face less rivalry. We can also secure the most important
channels and can position our customers to be satisfied. More importantly we will
be gain expertise by actually participating in that business.
Competitive Quality 3:
We can build our own strong Strategic Alliance by making strong and reliable
relation with different institutes. There are many institutes in Sukkur who have no
hostel facility so they will feel difficulty in this regard. There are many students
who just because of residential problems can’t take admission in the institutes of
Sukkur. So we will solve their problem by offering them the best hostel. So
institutes can refer our hostel to their students to live in. Especially those institutes
which offer entry test for different fields. So they need accommodation of their
students for a short period of time. And by doing this, different institutes will do
our indirect marketing which will support us well.

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 Appendix
 Market research .docx file document.
 Financial statement .xlsx file document.
 C.v's of Group Members.
(1) Saadullah Arain.
(2) Saad Arain.
(3) Nimra.
(4) Saeed Ahmed.

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