Franchising & Business Start Up

A REPORT ON NAMASTE SOLAR COMPANY IN AUSTRALIA

  1. Financial Information

    1. Initial Investment Cost

To start a solar company in Australia, one needs a minimal initial investment cost of around AUD $125,000 per, a total initial cost of AUD$132900 and a marketing cost of around AUD$100,000 MWp capacity. This will total an approximately AUD$357,900. This amount would sufficient, and it was used for starting Namaste Solar Company (Bahadori and Nwaoha, 2013). With the initial investment cost, the solar company was able to fund its activities which are designing and installation.

Trademarking/Registration

Amount in AUD($)

Trademarks

Regulatory Bodies-Franchise Council of Australia

Business Name

Operating Manual Revision

Recruitment Costs

Advertising

training

store setup

Rental rate

Equipment purchases

Leasehold improvements

Store fit out

Stock purchases

Total initial cost

Marketing costs

Suggested Franchise Fee

Turkey investment

Total initial investment

Royalties 6% of sales

    1. Return On Investment

Return on Investment measures the returns that the company realizes from investing its capital. From the enterprise analysis and valuation information from the annual report of the company, the Return on Investment (ROE) has been going up in the last years. There has been a considerable increase from the financial year 2012 to 2016.

    1. Payback Period

Namaste Solar Company has enhanced their products thus making the organization enjoy a good payback period since their products are having higher demand (Timilsina et al., 2012). Also improving the organization’s efficiency has made the company to produce many solar products also the company has been voted the best in many times in Provision of quality products which satisfy the customer.

    1. Break-Even Sales Point

Break-even point is the point whereby the total cost and the total revenue is equal. Generally, there is no any net profit or even loss made. The organization is not making either profit or loss, however, is paying the opportunity cost as expected. Also, there are capital adjustments of the capital as found out by Byrnes et al. (2013). From calculations, the break-even point for Namaste Company will be calculated as:

At break-even point; total revenue=total initial cost, Break-even point = total initial investment costs / (average price per unit — average cost per unit), AUD$125,000/ (1,000-400), the break-even point =208.3333

    1. Projected pretax income

The company is anticipating the growth of the number sales which will increase the income before tax expenses are deducted. The solar industry’s growth in Australia is around 14% annually according to Timilsina et al. (2012). This can be used to project the pretax income.

Pre-tax income(AUD $)*103

Source: own

    1. Expected Sales Growth over a period of 5 years (based on market size /share)

Namaste Solar Company is committed to expanding their production capacity to the increase in the demand for their products. Also, the market share of solar products is anticipated to rise to around 20% by the year 2020 in Australia as projected by Tucker (2011). The current estimate of the market share is around 14%. Increases marker size will make the Namaste Solar Company to grow their sales thus generating income.

The expected growth of sales by the year 2017 is projected to be almost 3.89% which is equivalent to around AUD $140,000. This is the lowest estimation anticipated in the first quarter of the report. By the financial year 2018, there will be an anticipation of around 12% from 2017E in the solar industry (Hua et al., 2016). From 2018 to the fiscal year 2020 the expected growth will increase to an average of around 135 units of sales annually. This is the projected growth in sales.

2) Stakeholder Charter

2.1 Internal

2.1.1 Owners

Namaste Solar Company has been publicly trading corporation, with some shares which exceeds 100 million. There are preference shareholders with voting rights and also ordinary shareholders with the right to vote who own the company (Tucker, 2011).

2.1.2 Employees

The company was initially employee-owned then to a worker-owned co-operative. By the year ending 2014, the company had 90 employees, where 46 of them were worker-owners.

2.1.3 Investors

The high cost of the solar energy production is a threat to solar energy companies making investors be reluctant in investing in the solar energy but instead choose other renewable sources of energy such as the wind energy which do not require more investment costs according to Masini and Menichetti (2013). However, there is the increase in focus worldwide on the protection of the environment with coming up with environmentally friendly energy solutions. This will attract more customers and also, investors thus leading to the growth of the Namaste Solar Company.

2.2 External

2.2.1 Customers

The excessive demand for the solar energy product makes the Namaste Solar Company not do much to acquire customers for their products (Gadgil et al. 2007). However they are advertising their products they are not advertising heavily.

2.2.2 Suppliers

In the solar industry, the bargaining power of the providers of the raw materials is relatively small which makes Namaste negotiate their prices thus lowering their cost of expenditure.

2.2.3 Community/Society

Namaste Company creates employment especially for the youth in the community. This is essential since it will increase the economic growth of Australia.

2.2.4 Unions

European Union has developed a climate package which aims at safeguarding the environment by recommending and ensuring the use of environment-friendly sources of the environment (Sener and Fthenakis, 2014). This is beneficial to Namaste Company since more solar products will be bought. S

2.4.5 Government

The Australian government strongly encourages the use of renewable sources of energy with the focus of cost-efficient and also ensuring sustainable energy supply.

2.2.6 EPA

Environmental Protection Agency (EPA) is a major client of Namaste Solar Company in designing, supplying and also installation of Solar Systems for them (Hua et al., 2016).

2.2.7 Electricity Companies

Namaste Solar Company is providing stiff competition for Electricity Companies. Solar energy reduces the cost of consuming electric power.

2.3 UN Global Compact

The UN Global Compact supports corporate sustainability which mainly comprises of operating minimum and meeting fundamental responsibility in the areas such as labor, environment, anti-corruption and many others. Companies such as Namaste are expected to be responsible thus enacting values and also principles as stipulated by the UN Global Compact (He et al. 2016).

REFERENCES

Bahadori, A., & Nwaoha, C. (2013). A review on solar energy utilization in Australia. Renewable and Sustainable Energy Reviews, 18, 1-5.

Bhattacharya, M., Paramati, S. R., Ozturk, I., & Bhattacharya, S. (2016). The effect of renewable energy consumption on economic growth: Evidence from top 38 countries. Applied Energy, 162, 733-741.

Byrnes, L., Brown, C., Foster, J., & Wagner, L. D. (2013). Australian renewable energy policy: Barriers and challenges. Renewable Energy, 60, 711-721.

Gadgil, A., Al-Beaini, S., Benhabib, M., Engelage, S., & Langton, A. (2007). Domestic solar water heater for developing countries. http://energy. lbl. gov/staff/gadgil/docs/2007/solar-water-heater-rpt. pdf. Accessed on, 6(04), 2013.

He, Y., Xu, Y., Pang, Y., Tian, H., & Wu, R. (2016). A regulatory policy to promote renewable energy consumption in China: Review and future evolutionary path. Renewable Energy, 89, 695-705.

Hua, Y., Oliphant, M., & Hu, E. J. (2016). Development of renewable energy in Australia and China: A comparison of policies and status. Renewable Energy, 85, 1044-1051.

Masini, A., & Menichetti, E. (2013). Investment decisions in the renewable energy sector: An analysis of non-financial drivers. Technological Forecasting and Social Change, 80(3), 510-524.

Sener, C., & Fthenakis, V. (2014). Energy policy and financing options to achieve solar energy grid penetration targets: Accounting for external costs. Renewable and Sustainable Energy Reviews, 32, 854-868.

Timilsina, G. R., Kurdgelashvili, L., & Narbel, P. A. (2012). Solar energy: Markets, economics and policies. Renewable and Sustainable Energy Reviews, 16(1), 449-465.

Tucker, A. (2011). Government Intervention in Clean Energy Technology during the Recession. Tex. Envtl. LJ, 42, 347.