This document on “Smart Home Automations Services” provides information about establishing a business for provision of services to make the homes safe and secure and to enjoy a more convenient living by automating different appliances in the homes. The basic concept of home automation system is to provide people a comfortable, safe, convenient and highly efficient life environment. Smarter homes allow people to save money, be more environmentally friendly, feel more secure and enjoy a variety of conveniences that make the everyday living easier and less expensive to maintain.
In recent years, local tech companies in Pakistan have started offering a range of home automation services, from end-to-end security arrangements to smart appliances installations. As Pakistani standards of living are coming at par with international living standards, the idea of home automation is becoming popular in the local population. During the past five years, the home automation market witnessed a significant growth in Pakistan due to a growing awareness about this technology and the offered benefits of higher security and convenience.
The Smart Home Automation Services business is proposed to be ideally located in the metropolitan cities of Karachi, Islamabad, Lahore Rawalpindi, Multan, Gujranwala, Faisalabad, Quetta and Peshawar. These cities are preferred, because majority of upper class of Pakistan resides in these cities and there is an easy availability of relevant experts and skilled labor.
This pre-feasibility document provides details for setting up a business to offer Smart Home Automation Services. The proposed business has a capacity of providing services for 8 hours a day, 280 days a year. The service delivery capacity utilization in the first year of operation is assumed to be 60%, while maximum capacity utilization is assumed to be 100%, achieved in the fifth year of operation.
The proposed project will be set up in a rented building having an area of 1,125 sq. ft. (5 Marla). The project requires a total investment of PKR 5.85 million. This includes capital investment of PKR 5.25 million and working capital of PKR 0.60 million. The project will be established using 100% equity financing. The Net Present Value (NPV) of project is PKR 16.32 million with an Internal Rate of Return (IRR) of 69% and a Payback period of 2.20 years. Further, the proposed project is expected to generate Gross Annual Revenues of PKR 13.08 million in the first year of operations, Gross Profit (GP) ratio ranging from 52% to 73% and Net Profit (NP) ratio ranging from 3% to 34% during the projection period of ten years. The proposed project will achieve its breakeven point at capacity of 55% (3,801 service hours) at gross revenue of PKR 11.93 million.
The proposed project may also be established using leveraged financing. At 50% debt financing at a cost of KIBOR+3%, the proposed project provides Net Present Value (NPV) of PKR 24.55 million, Internal Rate of Return (IRR) of 69% and Payback period of 2.19 years. Further, this project is expected to generate Net Profit (NP) ratio ranging from 14% to 34% during the projection period of ten years. The proposed project will achieve its estimated breakeven point at capacity of 58% (3,826 service hours) with breakeven revenue of PKR 12.70 million.
The proposed project will provide employment opportunities to 15 to 20 people. The legal business status of this project is proposed as “Sole Proprietorship”. High return on investment and steady growth of business is expected with the entrepreneur having some prior experience or technical education in the related field of business.