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Geoff Jamieson

Autor:   •  February 7, 2019  •  1,327 Words (6 Pages)  •  28 Views

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*See Excel file ‘Shamshir Jessa Case Numbers’

Shamshir is not being realistic about what is required for success of this business. There are several assumptions made throughout the case that I would disagree with. He assumes his total costs to be around $3000 for the first 6 months; incorporation fees would be at least $1000 and his legal fees budget would cover talking to a lawyer for 10 minutes. Also it doesn’t make sense how he noted that there are 1380 trucking companies with each 1-10 trucks but he used 3 trucks as the average?

The revenue model seemed to be completely made up. A problem that this business faces is the fact that there is a finite amount of truck drivers and contractors, meaning there is a hard cap on the amount of money that can be made. The only adjustable variables are the costs and the revenue model. The revenue model should be more thought out and definitely priced higher in order to make substantial enough revenue to make this opportunity worthwhile. Shamshir also indirectly seems like he is assuming a 100% market share in this industry, which is not the case at all. For the purpose of the case we will assume a 100% market share and shine light on the lack of competence and execution there is, even with no competition.

Shamshir was very reckless with handing out a large chunk of equity to both Ken then Nav, and it leaves him as a minority shareholder owning 30% equity in the business.

An assumption made while analyzing financial are the two different scenarios of payout % (and a no tax assumption). In the real world the business should not be looking to make large payouts at least the first couple years, instead reinvest the money to better scale the business. Using the more realistic scenario (payout 50%), Shamshir would make $58,680 in a perfect world (assuming he has got all 4140 truckers and 119 contractors). This doesn’t seem like that much more of a return compared to other options he has; engineer @ 42,000/year, or even trying to pursue a potential project management job like his professor. This assumes though that it is a perfect world. In the table ‘1st year projections’, I used the assumption they would make $14,000 in the first 2 months and then every month after would grow by 10%. If they did this perfectly they would make $13,717.87 on the year for total revenue. This means that if they paid themselves 50%, Shamshir would only end up with $20,507.55 annual income.

It doesn’t seem like Shamshir is very dedicated to the project, and for that reason I don’t think he should pursue this opportunity. He is better of starting an entry engineer position after graduation at two times what he would have made building the trucker business. If Shamshir decides to pursue this opportunity there are a couple main issues he should focus on:

- Rethink the revenue model

- Get control of the equity distribution

- Make more time for the business, it’s a full time job- treat it like that

- Be more transparent with the users (truckers) and contractors

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