You are on page 1of 98

Sky

Detection
Security
Pursuing perfection in drone detection

SDS Radar

Business Plan
10th December, 2015

Business Plan | [Sky Detection Security]

Index
Index .............................................................................................................................................. 1
Section 1: Charter Introduction ................................................................................................... 4
1.1 Document Distribution List ................................................................................................. 4
1.2 Project Plan Approval Signatures....................................................................................... 5
2. Executive Summary .................................................................................................................. 6
2.1 Financial Summary .............................................................................................................. 6
2.2 What do we do? .................................................................................................................. 7
2.3 Why do we it?...................................................................................................................... 8
2.4 Contacting SDS ................................................................................................................... 9
3. Business Description ............................................................................................................... 10
3.1 Service Description ............................................................................................................ 10
3.2 SDS Business Philosophy................................................................................................... 11
3.2 Product Need ..................................................................................................................... 12
3.3 Our targets ......................................................................................................................... 14
3.4 Future Goals.......................................................................................................................16
3.5 SWOT Analysis ................................................................................................................... 17
4. Market Overview (Opportunity) ............................................................................................ 18
4.1 Economic Impact ............................................................................................................... 18
4.2 Demographic .................................................................................................................... 20
4.3 Geographic Area ................................................................................................................ 21
4.4 Psychographic Trends .......................................................................................................22
4.5 Phase of Life ..................................................................................................................... 24
4.6 Conclusions ...................................................................................................................... 25
5. Industry Overview .................................................................................................................. 26
5.1 Drone Industry .................................................................................................................. 26
5.1.1 Size and Payload ......................................................................................................... 27
5.1.2 Materials ..................................................................................................................... 27
5.2 Competitors set up .......................................................................................................... 29
5.3 Competition Who, How Many, How Big ...................................................................... 29
5.3.1 Targets of our Competition ....................................................................................... 32
5.3.2 Marketing, Products and Pricing .............................................................................. 33
1

Business Plan | [Sky Detection Security]

5.4 Stage of Industry .............................................................................................................. 34


5.5 Technology Comparison .................................................................................................. 36
5.6 Government Regulations ................................................................................................. 38
5.6.1 RF Regulations ........................................................................................................... 38
5.6.2 Future Regulations for Drones ................................................................................. 40
5.7 Porter Analysis ................................................................................................................... 41
5.7.1 Rivalry Among Existing Competitors ......................................................................... 41
5.7.2 Threat of New Entry .................................................................................................. 42
5.7.3 Threat of Substitutes ................................................................................................. 42
5.7.4 Bargaining Power of Suppliers ................................................................................. 42
5.7.5 Bargaining Power of Customers ............................................................................... 43
6.Risks ......................................................................................................................................... 44
7. The Marketing Plan ................................................................................................................ 46
7.1 Product .............................................................................................................................. 47
7.1.1 Service implementation ............................................................................................. 48
7.1.2 Product Usage ............................................................................................................ 49
7.1.3 System Usage Example............................................................................................... 51
7.1.4 Product Maintenance ................................................................................................ 53
7.1.5 End of Service and Commitments ............................................................................. 53
7.2 Price ................................................................................................................................... 54
7.3 Place .................................................................................................................................. 55
7.3.1 Office .......................................................................................................................... 55
7.3.2 Trade Fairs and Conventions ..................................................................................... 55
7.4 Promotion ......................................................................................................................... 56
7.5 People ............................................................................................................................... 58
7.6 Process .............................................................................................................................. 59
7.7 Physical environment ....................................................................................................... 59
8. Segment, Target & Position (STP)......................................................................................... 60
8.1 Segment ............................................................................................................................ 60
8.2 Target ................................................................................................................................ 64
8.2.1 Security Companies ................................................................................................... 64
8.2.2 Private Individuals ..................................................................................................... 66
8.2.3 Private Corporations ................................................................................................. 67

Business Plan | [Sky Detection Security]

8.2.4 Governmental Institutions ........................................................................................ 68


8.3 Position ............................................................................................................................. 69
9. Future Developments ............................................................................................................ 70
9.1 Risk Prevention through Radar Systems .......................................................................... 71
10. The Organization Plan .......................................................................................................... 72
10.1 Legal Company Structure ............................................................................................... 72
10.2 Organizational Company Structure ............................................................................... 73
10.3 Location ........................................................................................................................... 74
10.3.1 Office ......................................................................................................................... 74
10.3.2 Workshop ................................................................................................................. 75
10.4 Distribution and Production........................................................................................... 76
11. The Financial Plan .................................................................................................................. 77
11.1 Financial Terms ................................................................................................................. 77
11.1.1 Salaries ....................................................................................................................... 78
11.1.2 Direct Costs ................................................................................................................ 79
11.2 Model Inputs ................................................................................................................. 83
11.3 Profit & Loss Account .................................................................................................. 85
11.3.1 Taxes .......................................................................................................................... 89
11.4 Balance Sheet .................................................................................................................. 90
11.5 Cash Flow ......................................................................................................................... 92
11.6 Conclusions ...................................................................................................................... 92
10.6.1 NPV............................................................................................................................ 92
11.6.2 IRR ............................................................................................................................. 93
11.6.3 EBITDA ...................................................................................................................... 93
11.6.4 Graphs ....................................................................................................................... 93
12. Exit Strategy .......................................................................................................................... 96
12.1 PLAN A: The Modified Nike Manoeuvre: Just Take It. ................................................... 97
12.2 PLAN B: Selling to a Friendly Buyer ................................................................................ 98
12.3 PLAN C: The Liquidation ................................................................................................. 99

Business Plan | [Sky Detection Security]

Section 1: Charter Introduction


1.1 Document Distribution List
Name

E-mail

Team Members
Aimar Roura Ramrez

arr591@gmail.com

Albert Cabanillas Garcia

albertcg94@live.com

Albert Cerro Gutirrez

albertcg93@gmail.com

Antonio Ortega Corral

toni_ortega@hotmail.es

Bartomeu Olivera Riera

tomeuoliver3@gmail.com

Christian Samarra Stehle

chsast@hotmail.com

Gerard lvarez Bruach

gerardalbru@gmail.com

Guillem Muntada Lobera

guillem92_bcn@hotmail.com

Joana Maria Llull Coll

joanamaria_11@hotmail.com

Juan Carlos Largo Castella

juanca.upc@gmail.com

Juan Jos Franco Herruzo

juanjo_fh5@hotmail.com

Lluc Boix Mundo

llucboix@gmail.com

Marc Riudalbs Clemente

marc.riudalbas.clemente@gmail.com

Marc Vizcarro Carretero

marcvizcarro@gmail.com

Michelle Cedeo Mata

mmiicchheellee.ccmm@gmail.com

Petar Hlad Colic

petar.hlad@gmail.com

Supervisors
Antoni Broquetas

broquetas@tsc.upc.edu

Albert Aguasca

aguasca@tsc.upc.edu

Final Customers
Jaume Mussons

jaume.mussons@upc.edu

Business Plan | [Sky Detection Security]

1.2 Project Plan Approval Signatures


Project Manager

_______________________________________
(Signature)

__________________
(Date)

Marc Vizcarro Carretero - Project Manager


SDS Project Manager

Project Sponsor

_______________________________________
(Signature)

__________________
(Date)

Joana Llull Coll - Project Sponsor


SDS Project Sponsor

Business Plan | [Sky Detection Security]

2. Executive Summary
Sky Detection Security is a new enterprise that provides intelligent integrated solutions to
drone attack and customizes it to the needs of each customer. To achieve drones detection
we will use radar-based systems.
Drones are more formally known as unmanned aerial vehicles (UAV). Essentially, a drone is a flying
robot. The aircraft may be remotely controlled or can fly autonomously through software-controlled
flight plans in their working in conjunction with GPS. UAVs have most often been associated with the
military but they are also used for search and rescue, surveillance, traffic monitoring, weather
monitoring and firefighting, among other things.

To support security technologies, SDS proposes the use of


radar for civilian purposes. That is why, our company offers
innovative services to enhance security programs and
improve business efficiencies. Our full breadth of services
for integration projects provide turnkey management, and
the resulting infrastructure allows the solution to remain
flexible and scalable as needs change.

Radar is able to offer more competitive and personalized


services.

Initial Radar Protoype Design

We are flexible with our services and we prepare packages according to a clients
specifications. Our relationship with clients is important. Thus we offer the best laid out
solutions including advice and consultations.

2.1 Financial Summary


Regarding the financial terms of our company, we may advance some initial numbers that
will allow you to forge an initial idea about the size of the company:
Shared Capital

150,000

Needed capital

332,400

Our enterprise has been obliged to ask for a loan in the bank. Financial losses are
considerable for the first year, achieving the breakeven point the second year
approximately and having profit from the third year.

Business Plan | [Sky Detection Security]

2.2 What do we do?


This project is aimed to provide a service based on security. To successfully achieve these
goals, we will harness the advantages that radar systems offer; for example: no need of sun
or day vision, no interference with the customer privacy, possibility to optimize and
automatize the system and so on and so forth.
The ministration offered would include maintenance in case of any damages of the product,
installation and technical tools needed for a clear and effective attention.
Nonetheless, the primal intention of this service would be to cover security and protection
needs against non-military drones. Enterprises may be interested in protecting their
investigations in front of possible competitors, important people may want to protect their
identity from burden press or even organizations such as the State could use our service
against criminal activities. That is why, as the scene unfolds, our target product may be
expanded in a future to different sectors.
Using radar systems is something that has not been done yet when it comes for civilian
purposes. Therefore, we strongly believe that with just that simple idea we can successfully
stablish a highly profitable business.

Figure: Product Initial Idea


Source: Own Source

Business Plan | [Sky Detection Security]

2.3 Why do we it?


Communications and the dissemination of information are so ubiquitous now that we
hardly even realize the constant flow of information hitting us.
In the 20th Century, military research precipitated many widely used technological
innovations. Surveillance satellites enabled the GPS-system, and defence researchers
developed the information swapping protocols that are fundamental to the Internet. UAVs
(unmanned aerial vehicles), commonly known as radars, fall into a similar category.
Designed initially for reconnaissance purposes, their para-military and commercial
development was often out of sight of the public, but as the technology becomes more
advanced and costs fall, civilian day-today uses of UAVs are developing rapidly. Prior to
WWII, the main form of household communications device most people had in their homes
was the radio, and nowadays drones are a danger to privacy.
Given the mounting sales of hobby drones, which are estimated at 300,000 units per
month, and their increased performance capabilities coupled with falling prices, the
potential for misuse is set to grow significantly. This is evidenced by the large number of
international incidents that have been reported in recent months, from mysterious drone
flights over French nuclear plants to a drone with radioactive material found on Japanese
Prime Minister's office roof. As a result, there is a high demand for an efficient system that
will protect against such threats.
Drone strikes have increased to 53% compared to previous years which make drone
detection become necessary.
Drone is a big concern for our world nowadays as we can see in some of the following
global drone news:
11/10/2015 Consumer Drones Sales to Reach 16 Million by 2020
11/09/2015 Irelands Drone Registration System Going Live Before Christmas
11/09/2015 Germany Plans Drone Registry Too
11/09/2015 Hong Kong man detained for flying drone over royal palace
11/08/2015 Drone crashes inside Strangeways prison

Business Plan | [Sky Detection Security]

2.4 Contacting SDS


Avinguda Madrid, 18, 5-2, 08028, Barcelona
Email: skydetection@sds.com
Office number: 932 568 245

Follow us on twitter
Join our facebook page

SDS Logo

Business Plan | [Sky Detection Security]

3. Business Description
In this section we are providing with a description of our service offered, while trying to
cover aspects such as: why we consider this product is needed, our target in relation to it.
Future goals will also be covered with ideas of our company explosion and development.

3.1 Service Description


SDS is planned to be a multinational private security company spread out over Europe, Asia,
Oceania and Latin America. The firm will be established in 2016, and its head office will be
located in Barcelona, Spain. Our service areas comprise manned guarding, home security,
fire defence, and security technology and consulting.
Our business idea is to start offering a service which will furtherly be developed. Thus, it is
important to demonstrate our clients the effectivity of our mechanisms and its advantages
in front of other competitor companies. In order to do that, we will need a highly qualified
technical team to develop a device based on radar technology, so that it can be adapted to
client requests.
The constant training of our professionals, coupled with ongoing programs of R&D, allows
us to establish the most comprehensive risk analysis, design and implement the electronic
security system that each client needs. To do this, we integrate in our Control Centers
Management Systems Access , CCTV , intelligent video analysis systems and interior and
perimeter alarm , among others.
CCTV and Intelligent Image Processing Video
These are monitoring systems that provide remote monitoring of the client installation by
allowing cameras and recording and archiving of images. The intelligent image processing
to detect intrusions, avoid crowds or identify abandoned objects
Special Facilities
Intercommunication systems, public address and voice and data.
Maintenance
Support service of installed systems and preventive and corrective maintenance.
Integration Systems
Interconnection of the various subsystems of safety and control systems installed on the
client. Integration into a single computer system for control and management.

10

Business Plan | [Sky Detection Security]

3.2 SDS Business Philosophy


As a company we strongly feel that drawing our customers initial attention to our
operational philosophy will prove to be useful in persuading them.
To illustrate this point we have decided to build the next figure, which may be used in the
future for marketing purposes.

Mission
Provide security systems
based on detection
against drones for civilian
purposes.

Values

Innovation
Effectiveness
Adaptability
Safety
Empowerment

Vision
The exponential growth of drone
market needs to be regularized
and secured.
Society is unprepared to face the
threats of this new technology
paradigm.

11

Business Plan | [Sky Detection Security]

3.2 Product Need


The existence of the need of our product is undeniable. People and specially the private
sector need to be provided with effective security systems against drones. There are other
security detection systems based on technologies such as ultrasound and optical
mechanisms. Nonetheless, few enterprises have exploited the benefits of microwave
technology for civil purposes. Hence our company strongly feel there is a real opportunity
to exploit the market.

How do we plan to meet those needs?


In the ground surveillance segment where
traditional electronic perimeter protection
solutions typically only monitor the boundaries
and lines, our radar provides complete meter-bymeter coverage both outside and inside a
physical perimeter for detection and tracking of
fast-moving objects, drones. The radar generates
tracks with very low probability of false alarms
and provides for discrimination between various
intrusions, even in complex environments with
many obstacles. The open architecture design
facilitates easy integration with cameras and
third-party surveillance systems, including SDS
intelligent wide-area perimeter detection
solution.
Our main market niches will be all our possible competitors and other security companies
that may use other technological devices to provide surveillance against drones or human
attacks.

There is hardly any other technology currently developing as fast as drone technology.
However, the increase in drone efficiency also means more opportunities to misuse them
for criminal purposes. When your airspace is exposed, no longer are fences, video cameras,
and security guards adequate to protect sensitive buildings or personal.

12

Business Plan | [Sky Detection Security]

Figure: Possible loads of a drone


Source: Own Source

A drone that can carry up to 5 kilograms and fly several kilometres can now be bought for
less than 1,600 euro on the internet, or in any local electrical goods store. Using a GPS
control system and autopilot, many of these small aircraft are able to fly programmed
routes on their own without a pilot.
Drone technology provides us with a totally different lifestyle in different aspects
agriculture, goods delivery, photography, medical services, etc. All those existing works
may contain a dangerous brunt or expensive human resources; this is where drones come
into place and can provide a more efficient work with less effort as the can be controlled by
home. The main problem comes when those UAV suppose a risk for human rights, how is
that possible?; drones suppose a high security risk due to their possible aim of traffic arms
or drugs, they can also be used to encroach privacy and this is where SDS comes into action.
We are offering a possible control of UAV directly used for intimidating human rights or any
other intent or any other intents of violation of property.
SDS attempts to prevent possible drones attacks which, differently from other security
companies that may also cover human attacks we take that security farer away covering an
area that is expanding rapidly and can either have possible but also negative attacks into
human lifestyle.

13

Business Plan | [Sky Detection Security]

Drone technology provides us with a totally different lifestyle in different aspects,


agriculture, goods delivery,photography, medical service, etc.

Benefit
Work people
were not able
to do before

Existing work

Dangerous
Work

Expensive
Human
Resource

Possible Problem

More
Efficient

Drones'
Applications

Regulations
and Policies

Human Rights

Security
Risk

Invasion
of
Privacy

Hostile
Actions

Infringement

SDS will try to provide with an effective system


whose aim is to minimize drone problematics
Figure: Drone technology and SDS
Source: Drones and their Increasing Number of Applications, Jeffrey Funk

3.3 Our targets


Our main customers will be clients above 50 years old with needs of identity protection
ahead possible privacy attacks or business leaders who want to protect their business
developments from possible competitors or spies.
Many companies around the world see themselves affected by this air system attacks which
leads us to the high need of this kind of protection, this bases our target group to
companies, private use and other civilian purposes.
As it has been described in the popular science magazine recently:
"Recent advances in unmanned air vehicles have presented a new and evolving threat to the
BOPs mission. From small devices of less than a pound that can provide unauthorized imagery
and surveillance to larger systems that can carry 20 or more pounds of contraband, these
devices represent a new and unprecedented challenge for BOP personnel."
Source: Popular Science, Kelsey D. Atherton

14

Business Plan | [Sky Detection Security]

This also leads us to prison protection needs. Drones have been used for smuggling
contraband into prisons for years now, they are cheap enough and powerful enough to
carry a few pounds of goods, like cigarettes, knives, cell phones, or drugs over a prison
fence and they're sometimes even recovered from the drop to do it again. Prisons, which
understandably dont want drones to do this, are now looking for ways to keep the robots
out.

Figure: Example of how drones would be spatially located


Source: Own Source

15

Business Plan | [Sky Detection Security]

3.4 Future Goals


SDS would like to use international expansion as a springboard to acquire strategic
resources and reduce our institutional and market constraints at home (Spain). We are
concerned about the challenges that will have to be faced to achieve international
expansion. We expect to do that in a maximum time of 5 years as we think the key of our
service is faced to be efficient in the global market rather than limited to our country.
A business never goes global just in the pursuit of pure profitthere has to be a long-term fit
with the overall business development strategy.
One can be tempted trying to apply a domestic management approach to global
operations, but that is often not successful for a number of reasons, financial applications
have to be deled with. Overseas project financing involves many processes, calling for joint
participation of the operator, the constructor and the suppliers, with the risk shared by
each of the participants. There is also the challenge of developing more effective leadership
talent in the overseas locations. If you simply move executives from China to a different
country, they may have excellent reputations domestically but, in fact, might have little
overseas experience.
There is a scheme of some of the aspects that need to be taken care of when global
expansion.

Figure: SDS Strategy


Source: Own source

To carry out this idea we are considering the potential of the intelligence business cloud.
This will be a good way to expand our 'name' before facing global distribution.
16

Business Plan | [Sky Detection Security]

3.5 SWOT Analysis


SWOT Analysis is a useful technique for understanding our Strengths and Weaknesses, and
for identifying both the Opportunities open to us and the Threats we face.
A global insight harnessing this analysis is expected to be provided using the next figure:

Figure: SDS Swot analysis


Source: Own source

17

Business Plan | [Sky Detection Security]

4. Market Overview (Opportunity)


To start offering a global vision of the drone market we will precede analyzing different
aspects related with the exponentially growing drone business.

4.1 Economic Impact


Presented below, there are a few more statistics regarding the burgeoning drone market.
These statistics will all but disprove why a drone detection system around critical airspace
locations is necessary and will flourish. With the FAA mandated by Congress to incorporate
drones into the NAS by the end of 2015, the unmanned aerial vehicle market is expected to
increase dramatically.
According to the Association for Unmanned Vehicle Systems International, after the first
three years of integration into the NAS, the expected economic impact that the drone
market will have on the US economy is about $13.6 billion with added jobs tallying at 34,000
manufacturing jobs and 70,000 new jobs. By 2025, the market will have added 103,776 jobs
within the United States and generated $82.1 billion .
The following figure depicts an estimated market demand for recreational and commercial
drones through 2025, years are on the x-axis and quantity of drones is along the y-axis. As
can be seen by the following figure, the largest market 32 demanding commercial drones is
the agriculture market followed by public safety.

Figure: Drone Applications


Source: www.microdrones.com

However, there will still be a steady increase of approximately 15,000 drones per year
demanded for any other use. Either by non-professional people (civilians in general) and
specialised companies that have seen a unique opportunity harnessing drone technology
for their services.
18

Business Plan | [Sky Detection Security]

The previous idea is depicted in the next table:

Figure: How Companies Use Drones


Source: Forrester Research

19

Business Plan | [Sky Detection Security]

4.2 Demographic
Taking into account the huge economic impact that drones have in our society nowadays,
there is high evidence that leads us to think our service is needed around the world.
As we can see in the economic arguments mentioned before, drone market has been
developing rapidly and studies point that is expected to grow more in the following years.
Drones are used for many good reasons such as public safety and agriculture but, what
does make us think that all drones will be used for good reasons?

Drones applications
Source: www.airware.com

Drones are used to improve agricultural methods and safety, but they can also be used to
spy other competitors and violet privacy of business and leaders.
This fact causes us focusing our service to be mainly for enterprises such as R&D
enterprises, prisons, governments or other companies that want to protect their privacy
and researches. So we are focusing on a public of people above 50 years as the partners of
these companies are commonly above this range of age.
Our service can also be focused on privates, if so,
they would have a very high influence in our society
which can cause enemies or spies that may want to
follow their research. These privates, apart from
business leaders may be politics, famous people or
just wealthy people.

20

Business Plan | [Sky Detection Security]

4.3 Geographic Area


In such a globalized world as the one we currently live, drone technology does not
understand about frontiers. The global market of drone industry has expanded everywhere.
A clear prove of the previous statement could be the statistics provided by KPCBs Mary
Meeker from her 2015 Internet Trends report:

In that context, international expansion is the key for this project to succeed. But the
evolution of our company must proceed in an escalated way.
Given this point, we will first offer this service in Spain, as it is a very limited sector that may
be interested in our service. We have our personal web site which will be the main way to
contact us and look at our services which we will then be responsible to displace all the
equipment and do the proper installation according to the service required.
To carry through this idea, we will be in touch with different universities around the world,
offering a range of qualified students to do their end of grade projects with us and expand
this way our R&D member teams. This project will be based on research and possible
technological improvements of our system.
All the specifications depending on each client request will be specified by phone or email
and will then be provided.

21

Business Plan | [Sky Detection Security]

4.4 Psychographic Trends


The need of drone detection is a very concerning problem due to the growth of drone sales
and how they are being used with non-adequate purposes.
Some anti drone legal reforms have been necessary the last years; one of them would be
the following one of them announced on east bay express:
Just days after the governor ignored pleas from firefighters and
vetoed legislation that would have banned private aerial drones
from flying over wildfires, saying the bill was too "burdensome,"
Brown signed a bill that makes it illegal to fly drones over
celebrities homes, the LA Times$ reports. Firefighters had
strongly urged the governor to sign the previous anti-drone bill,
saying private drones have interfered with firefighting efforts. Wealthy celebrities have also
lobbied the governor, contending that drones operated by paparazzi invade their privacy.
Source: East Bay Express, Robert Gammon

Source: various sources

News around the world precise this necessity, security against drones. As we are directed
to costumers with high economical and business power they will certainly be concerned
about drone risks and SDS radar will cover those needs for them.
Crime or even doubler-dealer acts between organisations are starting to harness drone
technology.
However, nowadays drones are not of common use, as the civilian perception towards
buying them is not great enough. This fact, may give us some time to set up our enterprise
and evolve parallel as the drone trend keeps growing.

22

Business Plan | [Sky Detection Security]

The next chart is expected to provide with the common thoughts of the American populace
regarding drones:

Source: Drone Analyst (2015)

Nonetheless, on the counterpart, other sources appeal to next qualitative figure to warn
about the drone market evolution:

Source: Association of Unmanned Vehicles Systems International

As the market growths because of the improvement of drones features, the desire of
being prepared to be protected against them will arise exponentially, either from
companies, governments or specific individuals.
Commercial Drones Market Worth $4+ Billion by 2021 and Growing at 109% CAGR to

2020
Source: PRS Newswire, Ritesh Tiwari

To start, we plan to contact selected customers we think may be interested with our service
and convince them of the necessity of it.

23

Business Plan | [Sky Detection Security]

4.5 Phase of Life


Our service is needed mostly equally-full time during our customer's lives.
SDS radars need is also related to political issues that can
lead to wars and violence. In those cases, our customers,
even if they are private or they are running a business, will
increase business security for many reasons. For example,
enterprises growing in a hardness geographical area
(referred to violence) may need our service with more
emergency than others. Unfortunately terrorism and political
conflicts are significantly expanding nowadays; drones are
commonly used for terrorist attacks or for spying the
enemies in terms of arms production and trading. Many
countries see themselves involved in terrorist threads
nowadays, so it is a great opportunity for our business to
globally expand and offer high-security systems against
drones or other flying objects, as it is possible to adapt our
radar for other purposes.

Drone down at a Merkels


meeting in Germany

Due to the high risks of those latter facts radars have been used by military but for our
advantage, they are not available for all public.
As it has been mentioned before, video-cameras can be included in our radar, which can be
controlled with an application via computer or cell-phone. Video-camera resolution can be
improved due to the point where the flying object can be deeply identified and recognised,
so its source can be known; this may help to investigate where attacks come from.
To accomplish our primary purpose of expanding globally it is important to get all the
possible clients to know and be informed about our radar and its possible extra-services.
We have been implementing some marketing strategies to do so, and cash discounts will be
offered to our clients at the beginning of our agreement. Marketing strategies will be
explained in this document below.

24

Business Plan | [Sky Detection Security]

4.6 Conclusions
The use of drones, or remotely piloted aircraft systems, has been increasing with a surge in
sales to commercial outfits and amateur hobbyists. As they increasingly take to the sky,
industry insiders are agreed stiffer regulations may be required.
Unmanned Aircraft Association of Ireland (UAAS) held its inaugural Meet the Drones
open day at Weston Airport in a bid to raise awareness of the high-flying industry.
There is a real need now within Europe to look at what kind of laws will be needed now and in
the future to deal with matters in relation to security, in relation to privacy and in relation to
how different kinds of units will be regulated
Source: Irish Times, Mark Hilliard & UAAS

There are about 4,000 drones in and critics say while regulations exist for private users,
these are outdated and designed for model aircraft and rockets.
The Spanish Aviation Authority is currently involved in a pan-European effort to draw up
safety regulations, now at draft stage.
Issues of safety, security and privacy are paramount in a sector that is likely to be gigantic
in the coming years. This situation aware us about the need of this service.

Source: Association for Unmanned Vehicle Systems International

25

Business Plan | [Sky Detection Security]

5. Industry Overview
Once studied the current market of drone technology, we will focus on providing a clear
review of the future steps of such industry. Correctly analyzing which is the current state of
this sector is essential, as it will help us to detect our competitors and start designing
future developments for our radar based system.
Meantime, we will harness this research to prove the viability of this project and, in the
end, the creation of our enterprise.
To reach the proposed objectives, we will use a wide range of information mainly based on
reports gathered throughout the redaction of this project. The resources used are both
from our rivals websites and from reports that we have previously purchased.

5.1 Drone Industry


To understand how our system is going to work, it
is of vital importance to make a qualitative review
about the steps that drone industry is actually
making. We have already been discussing about its
huge market growth and its overwhelming future
prospects. But what about relevant aspects such as
materials, size, batteries, autonomy and so on and
so forth?
Indeed, radar detection is based on the idea of radiating electromagnetic waves and
collecting the incoming echoes caused by reflective bodies. Not all materials behave equally
when being radiated. Some will behave as perfect reflectors (i.e. metal) whereas others will
be invisible to a radar system (i.e. plastic). That is why, an statistical study is needed to
understand how our system may behave given the average drone characteristics.

26

Business Plan | [Sky Detection Security]

5.1.1 Size and Payload


Nowadays experts dare to classify drones in the next five groups, owing to the weight they
can load. This somehow can be associated with its size, which is a relevant parameter in
radar theory.
UAV Category

Max Takeoff Weight

Range Category

Micro

0.10 kg

Close Range

Mini

0.5 - 10 kg

Close Range

Small

10 150 kg

Close Range

Medium Short

150 -500 kg

Short Range

Medium

500 2000 kg

Medium Range

Large

>200o kg

Long Range

Our company will primarily focus on the detection of the underscored table rows, as these
drones could generate a potential threat against civilians, the major target of our company.
(The rest of UAV/Drones may be used with military purposes, a market segment that we do
not pretend to stock).

5.1.2 Materials
The main materials used in non-military drone industry are metal and plastic, although
innovations may introduce brand-new sorts of materials, such as, carbon fiber.
Radar detection only works when a determined substance presents certain reflectivity with
respect to the electromagnetic wave that irradiates the body. Reflectivity is a concept
dependent on a wide range variables, among them frequency and the materials own
characteristics. Due to that, in spite of having said that radars offer a vision to what a
common naked eye can see, this might not be always true. Plastic structures are the worst
enemies of our system.
However, any drone is comprised of little pieces of metallic materials that belong to the
electronic and mechanical parts of the device. Yet, if the whole structure is made out of
plastic, the incoming reflection will not be enough to sound our alarms or alert the security
personnel. Thus, the next question should be raised:

Is radar detection the optimal technology to finally detect drones?

27

Business Plan | [Sky Detection Security]

To answer with the correct approach we must take a quick glance at nowadays drone
industry and the final added features that plastic (our major threat) provides.
Plastic by its own is characterized for being light but at the same time moderately sturdy. In
the average civilian drone applications this would be more than fine, but when desired to
load several weight on the drone, plastic starts to be not the most proper material. Due to
that, in these cases metal is used, though it ultimately will cause a significant weight
increase.
That is why new materials are being researched and as the scene unfolds, fiber carbon is
positioning to be the intermediate material between plastic and metal. Besides, radars are
highly sensitive towards fiber carbon. An increase in its implementation may be hidden in its
astonishing decrease of cost production.

Figure: Carbon Fiber Cost Evolution


Source: Lux Research, Inc.

To solve the problem of plastic usage within civilian drones we should incorporate
secondary and less complex systems based on other technologies. Those are:

RF detection

Video detection

28

Business Plan | [Sky Detection Security]

5.2 Competitors set up


Despite the great viability of our project, the security drone industry is a new born sector,
especially when it comes to civilian purposes. Nowadays, such security is not of huge
importance among the average populace, which leads us to focus by now, on determined
sectors. This is the strategy that we are going to design through our marketing plan, and it
is the most preferred among the current companies that there are all over the world.
Generally, we could say that our rivals are mainly interested in providing service to:

Prisons
Airports
Industrial complex and facilities
Privacy of VIP
Anti-espionage
Concerts and massive events
Frontier coverage
Antidrug smuggling

On the other hand it is worth mentioning that in spite of the local character of some
companies, the majority of them operate globally. However, the service distribution is in
charge of third-parties, resellers, professional companies devoted to the implementation of
security systems that may desire to add security detection features. The companies do not
mention explicitly the number of workers at their disposal, but given the relative small
working period of the companies, no more than 2-3 years, we estimate that companies are
small (minus than 10-20 workers). This fact provokes them having to rely on other parties.

5.3 Competition Who, How Many, How Big


Competition is not abundant if seen without proper perspective, but given the small market
towards we are going to focus, we may say that is far bigger than what we had first
expected. This lays on the fact that drone security detection can be implemented using a
wide variety of technologies, as there is not any decisive winner yet.
Far from being a huge constraint, our rivals are still in progress and there are some
technologies determined to failure due to inferiority regarding others less exploited but
with a huge potential after a bit of research. That is why we have chosen radar technology,
which might be characterized by the initial complexity but highlighting for its huge
efficiency when correctly implemented.
Lets proceed to list our competitors, while using the information they provide to state
their main traits:
29

Business Plan | [Sky Detection Security]

1. Drone Detection (USA)


We are a company dedicated to securing people and
property from unwanted drone intrusions. Most drone
pilots are law abiding citizens and Drone Labs is an active
supporter of the drone community; however we also realize,
in the wrong hands, drones can be dangerous. To that end
we created our flagship product: Drone Detector
Source: http://www.dronedetector.com/

2. Dedrone (Germany)
There is hardly any other technology currently developing
as fast as drone technology. However, the increase in
drone efficiency also means more opportunities to misuse
them for criminal purposes. When your airspace is
exposed, no longer are fences, video cameras, and security
guards adequate to protect sensitive buildings or personal.
Source: http://www.dedrone.com/

3. Drone Shield (USA)


DroneShield responds to the growing use of consumer
drones for unethical purposes, and the resulting need for
effective countermeasures to drone intrusions. We
developed our products with the belief that the first step
to protection from drones is detecting them. With
DroneShield, we aim to help public and private sector
customers take proactive measures against airborne
threats to safety, security, and privacy.
Source: http://www.droneshield.com/

30

Business Plan | [Sky Detection Security]

4. Drone Detector Orelia (France)


ORELIA is a 100% French innovative company founded in 2007 by Rmi POITTEVIN and Boris
DEFREVILLE, two enthusiast engineers. We're based 60 km south of Paris, France. We are
expert in machine learning, signal processing and audio pattern recognition systems. Drone
Detector is a product offered by the ORELIA company.

Source: http://www.drone-detector.com/

These are the main companies devoting solely to drone detection services. Some of them
are associated with other security companies, which adopt a reselling role.

31

Business Plan | [Sky Detection Security]

5.3.1 Targets of our Competition


The Institut fr Hochfrequenztechnik und Elektronik held the Telecomm Summint 2015 in
which there was a dissertation whose topic was Unmanned Aerial Vehicles UAV, Drones
Detection, Tracking, Control. In this event experts discussed what concerns drone
security while analyzing the different ways to implement the security needed.
This analysis was made owing to the actual enterprises that are starting to offer services of
drone detection. The different areas to secure were classified following the next criteria:

Source: UAV, Drones Detection, Tracking, Control, Author: Dr. Werner Wiesbeck

By now, this graph and the study of our rivals, leads us to conclude that the targets towards
the drone security enterprises are focused at, are:

Governments (nonmilitary purposes)


Industrial companies
Specific Individuals (VIP, wealthy
people)

32

Business Plan | [Sky Detection Security]

5.3.2 Marketing, Products and Pricing


The scarce life of the sector provokes information to be conspicuous by its absence.
There is little marketing activity carried out by our competitors, at least the one which is
visible on their websites. But once again, we must mention that most preferred option
when it comes to sells is the association with bigger companies so that they can act as mere
resellers. That is why if desired to make a deeper analysis we should focus on those thirdparties.
As for the price, in all cases it is unclear and it is required to contact for further information.
This might be a result of tight competition between companies who do not want to reveal
their strategy. Besides, any technology used in drone detection has its pros and cons, but
also its costs, and thus managing such information would still be of little help to implement
a competitive strategy.
Another idea to bear in mind is that when dealing with security systems, pricing is usually
determined once the project has been pre-designed (project contests..). Added to the fact
that drone detection is a concept that is not going to be sold massively yet, it is pointless to
openly announce any price or fee. Due to that, all companies have decided to sell a service
rather than an autonomous product.

Examples of marketing from our rivals

33

Business Plan | [Sky Detection Security]

5.4 Stage of Industry


The same previous presentation has also details about which are the existing technologies
to achieve drone detection. Those have coincided with the ones we listed through the
study of our future competitors. They are basically the next ones:

Source: UAV, Drones Detection, Tracking, Control, Author: Dr. Werner Wiesbeck

In a consolidated sector, there would only be 1 existing technology, but as we have already
said, drone detection, specifically for civilian and private purposes is relatively new. The
high complexity of military systems has not made possible the transition that a lot of daily
services suffered in the past. Nonetheless military industry is a great example of the
voracity between technologies, and UAV detection is no exception.

Marketing from Blighter


(Surveillance Military Company)

The leading technologies in the latter industry are radar detection and video acquisition,
proofs that may demonstrate once again the viability of our project.
Recalling the previous explanation about drone security aimed for civilian purposes, we
must clarify that every company is still in the startup period, as there are not any clear
designs. In addition to that, all of the presented rivals state that although they may have

34

Business Plan | [Sky Detection Security]

already working systems, they are still developing them. As a matter of fact, our company
and the others may be considerate as R&D companies.
In the long run, we can assure there is going to
be just one surviving technology, the one which
proves to be more efficient and robust than the
others. We are determined to say it is going to
be radar detection.
To understand the last statement we have
prepared a clarifying table comparing the
different systems proposed by the companies
and ours one.

35

Business Plan | [Sky Detection Security]

5.5 Technology Comparison

Features

Drone

Drone

Detector

Shield

(USA)

(USA)

Orelia

Dedrone

SDS

(FR)

(GE)

(SP)

Audio Detection
Radio Frequency Detection
(If desired)

GPS Detection
Video Detection

(If desired)

Thermal Detection
Radar Detection
Detect Flying Drones
Detect Ground-Based Drones

(if desired)

Detect Water-Based Drones


Detect Autonomous Drones
Detection Strength
Estimated Best Detection
Distance (10)
Hardware replacement and
upgrades included

Medium

Weak

Weak

Weak

Strong
(Radar)

1000m
(RF)

40m
(Audio)

40m
(Audio)

100m
(Video)

2000m
(Radar)

247 Monitoring Included


Automatic Database Updates
and Backups
Connectivity Provided for
Remote Locations Without WiFi
Power Provided for Remote
Locations Without Access to
Power

36

Business Plan | [Sky Detection Security]

As you can see radar detection is the undeniable winning technology. However, as for the
others we may say that there is little to do but to become secondary technologies used in
punctual cases.
Some companies have opted for the implementation of multi-layer systems, that is to say,
using several technologies at once. This is an interesting strategy that can severely improve
the quality of any system, yet, it requires the accomplishment of characteristics such as
detection with the biggest range possible.
This specification is only achievable harnessing the benefits that radar offers.

37

Business Plan | [Sky Detection Security]

5.6 Government Regulations


The government regulations that our company will have to face are highly bounded. They
are mainly relevant to the characteristics that our radar system will use, concretely,
regarding the working frequency and the EIRP (Equivalent Isotropically Radiated Power).
Nonetheless we have found convenient to discuss about drone regulation tendencies since
there are going to affect our company indirectly.

5.6.1 RF Regulations
The Spanish law in conjunction with the European one, states clearly which is the maximum
power that can be radiated
On the other hand, the distribution of frequency bands is reflected in the so called Cuadro
Nacional de Atribucin de Frecuencias. The ministry in charge of the management of the
spectra is the Industrial, Commerce and Tourism Ministry.
In that context, SDS operation band has been selected regarding two criteria:
1.

Best band bearing in mind electromagnetic theory.

2. The minimum cost possible (even better if the band is not regulated, that is to say
free)
The resulting choice has been allocating the Radar working frequency in 9,65 GHz, with a
bandwidth of 300 MHz.
To understand the regulations associated with such band, we have looked for the CNAF
document with its associated notes ( Notas UN CNAF 2013 (actualizado segn Orden
IET/614/2015) ).
From there we have extracted the next data:

Atribucin

Servicio

Tipo de servicio

(To Allocate)

(Service)

(Type of service)

Notas UN

9,5 - 9,8 GHz

Ministerio de
Defensa
(Defense Ministry)

Preferiblemente exploracin de la Tierra


por satlite
UN - 60
(Preferably Earth exploration through
satellite*)

38

Business Plan | [Sky Detection Security]

Source: CNAF, Notas UN

Although there is not an explicit mention to surveillance and Radar systems, this band is
also restricted for that sort of usage.
As for the EIRP, the maximum power of the signals emitted by hour radar is going to be
bounded by the next regulation table:

Dispositivos de uso comn para deteccin de movimiento y vigilancia en varias bandas de frecuencia.
De conformidad con la Decisin de la Comisin 2011/829/UE por la que se modifica la Decisin 2006/771/CE
[] incluyendo sistemas de radar en aplicaciones de deteccin de movimiento y vigilancia,
determinacin de la posicin, velocidad y otras caractersticas de un objeto.
Source: Notas UN CNAF 2013 (actualizado segn Orden IET/614/2015)

Our Radar would surpass the maximum permitted EIRP/PIRE value, however, special
requests can be made and depending on the location exceptions in law can be made. If not,
other bands may be used.
Note: these regulations apply in both 3 global regions, which is an important aspect to bear in mind
when thinking about global expansion.

39

Business Plan | [Sky Detection Security]

5.6.2 Future Regulations for Drones


As for Drone regulations in civilian environments there
is still no clear regulation. FAA (Federal Aviation
Administration) in the US is pendant on releasing the
fundaments of Drone regulations. This conglomerate
of laws and rules will be the base of future regulations
in other countries, as it is expected to be in Spain.
Little detail has come to light, but until now FAA is working on points like:

Drone registration

Max speed of 100mph

Max altitude of 152,4 km/h

The pilot must maintain visual line of sight (unaided)

The aircraft must not operate over anyone not directly involved in the operation

Fly in daylight only

Due to that, we would like to proceed with caution and detail drone regulations in the
future when regulation is clearer and almost definitive. Nonetheless, overall, we may say
that these new regulation policies will benefit our company, as the only way to prosecute
the offenders is going to be through detection system like ours.

40

Business Plan | [Sky Detection Security]

5.7 Porter Analysis


After having proceeded to study both the market and the industry with which we will be
working with, we can state our conclusions developing a Porter Analysis. With it will be able
to get a better understanding of the situation, with the ultimate purpose of translating it
into de SWOT analysis.
Rivalry among
existing
competirors

Baragaining
power of
suppliers

Threat of
substitutes

Baragining
power of
customers

Threat of new
entry

Figure: Porters Five Force Analysis


Source: Own Source

5.7.1 Rivalry Among Existing Competitors


We have already seen that the new novelty of the sector creates somehow tight
competition between enterprises. Drone detection is a brand new concept and there is not
yet any leading organization. Thus, every company plans to reach the top position.
The demand of our security service is still unclear but it does exist, and it causes companies
having to operate globally in conjunction with resellers or other security enterprises. This
strategy will also be used by our company, as it will reduce the workload of having to
struggle with other companies but it will provoke a loss of liberty in managing the
distribution of our service/products.
To summarize, this are the highlights of this Porters force:

Industry Growth

Product Differences (between competitors)


41

Business Plan | [Sky Detection Security]

Informational Complexity

Same Targets

Startup Stage of Companies

5.7.2 Threat of New Entry


Entering in drone detection sector or even in radar industry is highly difficult. It is required to
manage both great amount of capital and greatly qualified manpower (mainly engineers).
In addition to that, our enterprise may need to firstly make a patent while starting to
establish the distribution strategy.
The ideas associated with this force are:

Need of Patents

Access to Distribution (operate globally)

Cooperation with Third-Parties

Initial Investment

Need of Qualified Workforce

Establishment of Brand Identity

5.7.3 Threat of Substitutes


This force does not represent a huge constraint in our sector due to the difficulty of
entering in the market. On the other hand, we could say that diversity of existing
technologies is favorable to us, as we think radar detection will sooner or later foreground
among the others. That is why we do not think other technologies can act as substitutes, as
long as, any company starts using the same technology as we do (radar based detection).

5.7.4 Bargaining Power of Suppliers


Supplier companies are bigger than us. Their distribution profile is oriented to a wide range
of technologies and thus, they are not interested in focusing their efforts in controlling any
concrete sector. The existing competition between supplying companies makes prices
remain steady and with a down trend as technology keeps evolving and building costs
decrease.
The same ides is applied to our enterprise, who does not expect to exert any action or
strategy towards suppliers.
42

Business Plan | [Sky Detection Security]

5.7.5 Bargaining Power of Customers


This is probably the hugest force that SDS will have to face, as customers hold the power
when it comes to consumption of security services.
Our customer targets are dispersed all over the world and establishing contact with them
through marketing policies could still be difficult. Some of them will want to contract our
services temporarily whereas others may desire to be permanently provided with drone
detection security systems. This distinction between potential customers could cause
variability in revenues provoking economic instability periods.
On our behalf, we should mention that this sort of customers do not desire to save money
when it comes to security services. They look for efficiency which eliminates the challenges
that present a cost competition between our rivals.
Overall, the most relevant traits of this force are:

Buyer Global Dispersion

Buyer Information and Localization

Impact of Quality Performance

Buyer Loyalty

Desire of Further Features

43

Business Plan | [Sky Detection Security]

6.Risks
In this section we will try covering all aspects related with a list of risks that we have
gathered. Despite having tried to summarize them, we shall remark that there might
appear unexpected issues not foreseen in this risk plan.
After some brainstorming and deep analysis on the project processes we have listed the
risks we have been able to come through. Such risks are classified regarding their impact
and their occurrence probability, but above all, bearing in mind the track.

Figure: Risk analysis table

44

Business Plan | [Sky Detection Security]

Possible solutions / mitigations are proposed in the next table:

Figure: Business Risks Mitigations

45

Business Plan | [Sky Detection Security]

7. The Marketing Plan


Marketing strategy is the fundamental goal of increasing sales and achieving a sustainable
competitive advantage. Marketing strategy includes all basic, short-term, and long-term
activities in the field of marketing that deal with the analysis of the strategic initial situation
of a company. In this section we will include aspects concerning the formulation, evaluation
and selection of market-oriented strategies and therefore contribute to the goals of the
company and its marketing objectives.

Our enterprises marketing strategy is based on the following ideas:

Create a company image based on the ideas of innovation and efficiency


Executing focused marketing actions towards:
o Very Important People (VIP)
o Surveillance companies
o Governments
High presence in technological fairs and conventions
o Face to face marketing supported with system demonstrations
Achieve a top position when it comes to positioning
o Key idea to face our competitors

46

Business Plan | [Sky Detection Security]

7.1 Product
SDS is a radar-based system supplier specializing in affordable non-cooperative small target
detection in extreme weather conditions. SDS mission is to provide high performing
surveillance Radar Systems to the global professional markets for security and safety
applications. SDS is one of the few radar system supplier on existing markets in the gap
filler category between very large military radar systems and minor navigational radars. Our
aim is to provide a service based on private and civilian enterprise security.

Figure: SDS Radar System

Nonetheless we are aware of the initial little selling capacity of our company, which is why
we find convenient to set alliances with already stablished security companies. Such
mutual symbiosis would allow these enterprises add innovative features to their security
systems. This idea also appears regarding the scarce capability of our company when it
comes to action once the drone is detected.
An example of potential candidates with whom to start alliances is:

47

Business Plan | [Sky Detection Security]

7.1.1 Service implementation


Radar service can be hired from our web site where all the information from the service will
be posted. To detail the instructions there will be an email and a phone available to contact
our company and carry on with the service required.
On the other hand, arrangements with security leading companies can also be reached. In
these cases the installation process would follow the next strategy.
Radar's installation depends on many facts such as location area, weather conditions and so
on; once the client has contact us we will send a team member to investigate the field and
range that has to be covered by our system. It may take some time to us to acclimate the
radar to each client request. Once all measures and data needed have been collected, we
will send our furnisher team with the appropriate equipment and all materials needed to
proceed installation.

Figure: Possible Configurations using SDS Radar


Source: Own Source

Of course, all those costs will be including when hiring the service are covered by our
company; in case of any damages if they come from system defaults our own company is in
charge of either repair damages or substitute the equipment. An insurance is also feasible if
the applicant wishes so, this allowance will cover external expenses which are damages
that do not hail from system glitches.
48

Business Plan | [Sky Detection Security]

In addition to that our company will be in charge of signalling the zone alerting of the
drone surveillance and its undesired presence.

Example of possible signaling that could be displayed.


Source: Federal Aviation Administration

7.1.2 Product Usage


Our service is expected to work unstoppably 24h a day. However, we will recommend our
customers to stablish their preferred surveillance periods so that the system can at least be
turned off 5 hours a day.
Regarding the emergence procedure when target sighted, we would like the customer to
choose the most preferred option to be exploited, that is to say:

Sound an alarm

Alert a partner security company


o In this case, drone detection could be included in the security service contracted
with an allied company. In this context we would act as mere subcontractors and
full details would be specified by the main partner.

Tracking the undesired drone

Gathering statistics

Antidrug Smuggling

Warn the police


o

Since 2014, clear regulation about drone usage has been stablished in the spanish
law code. When warnings are ignored or hostile action is executed the drone owner
could face a fine* raging from 300 to 2100 if caught.

*Reference: Real Decreto-ley 8/2014, de 4 de julio, de aprobacin de medidas urgentes para el crecimiento, la
competitividad y la eficiencia.

Further options could be exploited such as drone hi-jamming or even shoot down the
target, but due to illegality of these actions our company will not design offensive systems.

49

Business Plan | [Sky Detection Security]

Drone radio-jamming is a technique used in the


military sector consisting on creating interferences
that disable the drone control.

Local incidents have occurred in the USA. Legal actions


from the drone user have been executed against the
shooter.

By now, we should await for the Spanish law development in relation to drones and aerial
security.

50

Business Plan | [Sky Detection Security]

7.1.3 System Usage Example


Visual examples are the best to catch publics attention. In that sense, we have decided to
include some examples of our future advertising.

51

Business Plan | [Sky Detection Security]

Source: own source

52

Business Plan | [Sky Detection Security]

7.1.4 Product Maintenance


The radar based system will require periodic calibration and maintenance. This will made
every month, although our company will stablish connections with every installed system,
so that we can have daily reports about the different incidents that have occurred. Thanks
to this, we expect to detect system malfunctions and accomplish an efficient maintenance.
This service will be included in the monthly fees.

7.1.5 End of Service and Commitments


Once the consumer wants to wind up our service we will be in charge of retiring the whole
system and the installation. Although the radar system can be reused, some policies and
clauses have to stablish both for the company viability and for the customer's own
satisfaction.
As for the company commitments we may highlight the next ideas:

Initial viability study


o

This will provide with specific data needed to proceed in the system adaptation and
alert the customer of the success detection rate percentage.

Zero cost installation

Maintenance service

System upgrades

At least 19 hours of unstopped surveillance service per day

On the other hand, we will only ask the customer for the next compromise:

1 year of permanency when decided to contract our service


o Needed for the company to be viable
o If not, an specific fee will have to be paid

53

Business Plan | [Sky Detection Security]

7.2 Price
Following the same strategy as security companies do, we will set monthly fees for those
costumers desiring to buy our service. Instead of selling the radar and letting the costumer
handle it by its own, we feel the most preferred option is going to be the one in which the
costumer does not have worry about anything.
The fees will include the cost of production of the system but also they will be aimed to
cover expenses such as: system adaptation, calibration and maintenance or even the cost
of an hypothetical cooperation with a surveillance company.
So far, our company will have two selling service. The initial offered services will be:

Features

Service #1

Service #2

Medium-Strong

Strong

1500 m

2000 m

1085

1250

Radio Frequency Detection


Video Detection
Radar Detection
Detect Flying Drones
Detect Ground-Based Drones
Detect Autonomous Drones
Detection Strength
Estimated Best Detection Distance
Hardware replacement and upgrades included
247 Monitoring Included
Automatic Database Updates and Backups
Connectivity Provided for Remote Locations Without
WiFi
Power Provided for Remote Locations Without
Access to Power
Price (/month)

The company is expected to increase the service availability given its high investment in
research and development. The main working lines are going to focus in providing extra
detecting systems, such as: thermal detection, GPS positioning

54

Business Plan | [Sky Detection Security]

7.3 Place
Most services will be hired via web-site as all the specifications will be detailed in our web,
as well as images of our radar and its complements.
Our radar system and all manufacture work will be made in our workshop, but we have
rented an office in Avenida de Madrid in Barcelona which will be available during the week
for our clients to ask information in person and to sign contracts and agreements with our
enterprise.

7.3.1 Office
To contact us out of this time range it has to be by email, web site or social networks. Once
the service has been leased, we will be in charge of moving the whole equipment to each
costumers place and provide proper installation services.
Even if we start our company headquarter in Barcelona, we expect to expand rapidly as our
service can be required and needed all around the world so we plan to display a series of
physical consultancies in major provincial capitals.

7.3.2 Trade Fairs and Conventions


One of the primary objectives that we desire to achieve is to attend technological and
security fairs so that SDS can stablish a notorious presence in the sector. Besides, these sort
of events are the perfect place to demonstrate the system objectives through attractive
and concrete marketing actions.
Furthermore, potential customers could have the opportunity to speak face to face with
the technical team, allowing them to fully understand desired adaptations in the initial
service.
A list of conventions in which we would like to clearly state the presence of SDS are:

Saln Internacional de la Seguridad (Feria SICUR)


o Madrid, 23-26 February 2016

55

Business Plan | [Sky Detection Security]

Security Forum
o Barcelona, 25-26 May 2016

HomSec
o Madrid, 14-16 May 2017

This list will be expanded accordingly the evolution of our company. We do not reject the
idea of assisting to fairs in neighboring countries in a near future, but by now, we will focus
in Spain's market.

7.4 Promotion
First we will promote our service via the Internet,
especially through social networks like Facebook or
Twitter. Post ads both online and in newspapers and
technical journals.
Using social networks to advertise our company is a
really good and not very expensive way to do so and
to start with, as social networks are a very important
tool on everyone life nowadays; but when doing so
there are a few things that need to be taken care of:

Just showing up is not enough

There's a saying that "Just showing up is half the battle." But it's important to
remember that it's only half. People check those sites, see no new content, and after a
while give up. Having a "dead" page is worse than having no page at all.

Just because we built it, does not mean clients will come

Before we use our social networking sites to promote our self and our business, we
need to promote those social networking sites themselves.

Use aggregator apps to better manage our social network

An easier way is to use tools such as TweetDeck that let we see and manage multiple
SN accounts all at once, without going to the Web sites and logging in each time.

Do not flood the market


56

Business Plan | [Sky Detection Security]

Posting regularly is important, but it's just as important not to over-post.

Is not all about us

Social networking is designed to be interactive it's most effective when you don't
just use it as a broadcast medium for one-to-many messages, but also truly interact with
contacts; as they are actual or possible future clients.

Do not just link

We will use the link as a way to highlight our own expertise and opinions and to (subtly)
help promote our self but not as the main point of promotion.

Dress it up with multimedia

Sometimes, words just aren't enough and often they don't stick in a person's mind
nearly as long, nor as positively, as visual images do.

Use paid advertising wisely

Buying an ad give our company the advantage of appearing on the pages of people
who do not know about us.
It's better not get into advertising time on television or radio as they are considerably more
expensive than not trying to be viral on the Internet. Plus we need to have in mind that our
radar system does not have a very large target so it is not worth it for our company to
devote considerable amounts of money in that medias as most of its audience is not
interested in our service.
On the other hand, a great way to promote our
product and set the proper company image is
working in conjunction with governmental
institutions. Harnessing our initial location,
Barcelona, we may take a chance in participating in
technological competitions held by organizations
such as Barcelona Activa.
This would allow us to promote our products and in case of winning contests, our company
could start laboring an encouraging quality background.
Finally we have created the Sky Tour Detection (STD) to enjoy a tour of the major
universities in different countries giving lectures to young people know our proposal. Also
among the participants will select one member from each university to work with us as
interns, whether residents or foreigners. This will help our company extend globally.
These promotional ideas will give our business a vision of compromise, improvement and
qualified technology systems.

57

Business Plan | [Sky Detection Security]

7.5 People
To be successful in business, the habit of thinking must be developed in terms of exactly
who is going to carry out each task and responsibility. In many cases, is not possible to
move forward until you can attract and put the right person into the right position.
Our company is involved into specially getting our staff trained in interpersonal skills and
customer service with a focus towards customer satisfaction. Our company is going to be
highly distinguished into three different teams.
From one side there will be the technical team which is
going to be composed by engineers, technical and all
workforces necessary in the lab, they are going to be the
'thinking' group and the ones to work on our radar systems
and technical aspects of our project. Workforce will be also
in charge of transportation of the material needed to each
costumers house or business place.
Then, we will have a marketing manager that will organize
marketing campaigns and strategies to get our company
known around different countries. This person will be also
in charge of getting in touch with possible clients and
setting conferences with universities and different
enterprises. It is very important that this manager has
easiness when socializing with customers and knows how
to catch up clients attention and satisfy its needs or create
the clients the need of our service.
This sector has to prioritize clients wills and give them the service they want; it is very
important to bear in mind clients demands and adjust our
service to their needs.
To end up we need an accountant to carry on with all
enterprises balance sheets and profitable and loss
accounts. This person will be in charge of warning the
manager of economical expenses or incomes and of course
to provide solution when problems appear.

58

Business Plan | [Sky Detection Security]

7.6 Process
Our main process to appoint our service consists on the following phases:

Inquire which service and complements best adapt to your needs by having a look at
our website or contacting our company with the phone providing. Any doubts can be
attended by phone or there is the option of arranging a meeting with a member team
to be abreacted in person.

Once the service has been hired, select a date and a time to carry on the installation
process; its time depends on each client need, range to cover and geographical
situation. It is possible for our team to move to different cities but cost and time will
depend on that.

Enjoy our service and contact us in case of any dispute.

7.7 Physical environment


The workplace environment impacts employee morale, productivity and engagement, both
positively and negatively. The work place environment in a majority of industry is unsafe
and unhealthy.
The management must take an active role in not only defining the physical environment of
the workplace and making it conducive for workers but also alter the management style to
suit our employees. This refers to changing aspects like ethics, behaviour, commitment,
professionalism, drive and interpersonal relations in employees for the better. Todays
manager has to change his style of functioning in order to bring about effective changes in
these aspects. We have to spend more time on controlling these factors of the work
environment rather than micromanage. For this this aspects have to be taken care of:

Give adequate authority to employees


Delegate responsibilities
Increase their accountability
Encourage teamwork

Creating a work environment in which employees are productive is essential to increased


profits for your organization, corporation or business.
It is also very important for the client to have a formal and professional image of our
company, so when they come to our office order, cleaning, style and professionality are the
clue to transmit good vibes and confidence.

59

Business Plan | [Sky Detection Security]

8. Segment, Target & Position (STP)


As we have already mentioned in the previous section, SDS will try to reach the top leading
position in the market. We even expect us to be seen as an entrepreneurial and innovative
company.
Thereby, this section is aimed at providing with clear ideas about how we are going to
divide our market and how the image is going to be built up.

8.1 Segment
Throughout the business plan we have tackled the different traits concerning drone
technology. Potential usages of our service have been discussed, whereas now, we must
understand who could be the candidates to request it.
Lets recall the statements made to get a better understanding of our segmentation policy:
Uses

Locations

Sound an alarm
Alert a partner security company
Tracking undesired drones
Gathering statistics
Warn the police
Anti-drug smuggling

Prisons
Airports
Industrial complex and facilities
Concerts and massive events
Frontiers
VIP ownership

Bearing in mind the upper tables and the idea that our company offers service with civilian
purposes, our market can be divided into the next individuals:

Security companies

Private individuals

Private corporations

Governmental Institutions

Anti-Drone Movement Grows: Ethics, Legality and Effectiveness of Drone Killings Doubted.
We are in the midst of a month of actions against drones. Nearly 4,000 people have been
killed in some 420 "targeted killing" operations since the first drone strike was conducted
under the Bush administration in October 2001. There is now a growing movement of
people speaking out and standing up to protest the use of drones by the United States in
60

Business Plan | [Sky Detection Security]

Africa, the Middle East and Asia, as well as in the United States. Human rights groups are
questioning their legality; clergy are questioning their ethics and activists are protesting
their use. More are questioning whether the use of drones is actually decreasing or
increasing terrorism.
Drones will become more controversial as they are increasingly used, for example, in the
United States. According to Digital Trends, "The FAA [Federal Aviation Administration]
estimates that within the next 15 years, more than 20,000 drones will take to the skies in
the country. This fact leads us to the need of prevent ourselves, business and human right
from possible drone attacks converting as the potential buyers: public health and safety
agencies, corporations, new industries and companies and the public in general.
That number is expected to jump to 30,000 within 20 years from today - a number the FAA
refers to as 'relatively small.'" The domestic use of drones raises another set of legal issues
under the Fourth Amendment to Constitution.

63

Business Plan | [Sky Detection Security]

8.2 Target
In order to get a better approach of our targets a precise analysis is required. Their study
has been made through research and qualification of general points. These are

Financial Issues
Structural Attractiveness
Strategic Direction

Marketing Expertise
Opportunity Cost

8.2.1 Security Companies


Assessment Factor
Financial Issues
Segment Size

Segment Growth Rate

Profit Margin

What to consider?

What SDS is seeking?

There may be few companies,


but their potential interest can
result profitable.
Security companies are
characterized to have a constant
demand of their services.
Depends, need of negotiation
between companies.

Cooperative agreements while


benefiting from their experience
is security industry.
Gradual growth to understand
the different needs of the sector
The highest as possible.

Structural Attractiveness
Competitors

Distribution Channels

Practically nonexistent, at least


locally. No security company has
developed its own drone
detecting service.
Security companies would be in
charge of the distribution of the
service, as SDS radar would be
just another feature.

In case of existence, SDS will


stablish clear differentiating
strategies to set the top leading
strategy.
Externalize the distribution to
the companies.

Strategic Direction
Strategy
Goals

Security companies are a key target. Mutual cooperation will prove


to be beneficial either in economics and researching fields.
Great expectations within this
Create successful alliances and
target.
agreements with all security
companies

64

Business Plan | [Sky Detection Security]

Marketing Expertise
Resources

Capability

Not many resources may be


needed as the segment is
formed by few companies.
Marketing capacity will be
limited to assist security fairs
and contacting security
managers.

High productivity in marketing


actions.
Gradual improvement of
attraction.

Opportunity- Cost
Growth Options

Overall, security companies are going to be our major target. Their


customers will seek a wide range of security services that our
company will never be able to offer.

65

Business Plan | [Sky Detection Security]

8.2.2 Private Individuals


Assessment Factor
Financial Issues
Segment Size

Segment Growth Rate


Profit Margin

What to consider?

What SDS is seeking?

Little demand. Such target may


have contracted other larger
security companies.

Make them realize of the real


need of our product, and
provoking pressure on their
security company to stablish
cooperation.
Not a huge growth within time

The amount of wealthy people


will remain constant and little.
Considering how powerful
people behave, security is
something necessary, despite its
cost.

The highest benefit as possible.

Structural Attractiveness
Competitors

Distribution Channels

Rich people may have their own


guards, but when it comes to
drone detection they are not
valid competitors.
In this case, we would offer a
personalized service, and we
would be in charge of
transportation.

Stablish alliances within the


companies of the sector.

The cheapest distribution.

Strategic Direction
Strategy

Goals

Private individuals may not contract individual security features.


They avoid complicated procedures, and that involves contracting
many services. Alliance with security companies may open us the
door to such targets.
This target will rely on the
Create a brand image based on
company background to
quality and efficiency
contract our services.

Marketing Expertise
Capability

Role of Brand

Rich people may are dispersed


and may be difficult to carry
global marketing actions.
As mentioned before, this
aspect is of huge importance for
these targets.

The best marketing is going to


be our image and quality.

Difficulty to set up in this sector.

SDS is rather interested in other


targets

Technological contests are


going to be our best asset in
case we win them. They will help
us to stablish the image we
need.

Opportunity- Cost
Growth Options

66

Business Plan | [Sky Detection Security]

8.2.3 Private Corporations


Assessment Factor

What to consider?

What SDS is seeking?

Financial Issues
Segment Size

Big

Encompass the entire segment


if possible.
Gradual growth to understand
the different needs of the sector

Segment Growth Rate

Profit Margin

As the drone market will grow


this target will increase its need
for security
Profit will rely on our ability to
maintain our service the longer
as possible.

Offering system updates to


encourage the permanency of
the customers.

Structural Attractiveness
Competitors

Distribution Channels

A lot of corporations have their


own security department, and
they tend to protect by
themselves
In this case, we would offer a
personalized service, and we
would be in charge of
transportation.

Raise awareness, and provoke


them asking for our services

The cheapest distribution.

Strategic Direction
Strategy

Goals

Once again this a key segment in which SDS would like stablish
progressively and keeping up the initial demand to ensure great
benefits.
Maximum customers for the maximum time possible.

Marketing Expertise
Capability

Medium

Role of Brand

Important. Corporations are


looking for efficiency and
quality.

We may stablish contact with


corporations through
personalized marketing or even
in technological fairs.
Technological contests are
going to be our best asset in
case we win them. They will help
us to stablish the image we
need.

Opportunity- Cost
Growth Options

Increasing according with our


capability of supplying the
service.

Company growth while


developing other services for
the segment.

67

Business Plan | [Sky Detection Security]

8.2.4 Governmental Institutions


Assessment Factor
Financial Issues
Segment Size

Segment Growth Rate

Profit Margin

What to consider?

What SDS is seeking?

Huge, but it would require us


working devotedly in case of
hiring our services.
Drone market is an imminent
threat for governmental
institutions. Hence it will grow
exponentially.
Big benefits but with huge social
responsibilities

We would like to encompass the


segment once we are
experienced enough.
Great demand once we feel we
can successfully provide with
our service.
The highest as possible
regarding the responsibility that
it entails.

Structural Attractiveness
Competitors

By the time we want to stablish


as a leading company within this
segment there may have
appeared competitors.
We may enter in conflict with
military surveillance companies,
which is not our objective.

In case of existence, SDS will


stablish clear differentiating
strategies to set the top leading
strategy.

Strategic Direction
Strategy

Goals

Setting up in this would mean the success of our company, as it


would be a result of having become a medium large company.
Initially we will not focus in this segment
Become the leading company within civilian drone detection
security in this segment.
Be able to supply this segment.

Marketing Expertise
Capability
Resources
Role of Brand

To be determined

Opportunity- Cost
Growth Options

Great growth expectations. Nonetheless a great operating capacity


is needed.

68

Business Plan | [Sky Detection Security]

8.3 Position
The positioning strategy that SDS has decided to implement is based on a difference
positioning. By know our biggest asset is the radar based detection system, idea that will
be used to highlight its properties in detriment of our rivals systems.
Given the particularities of our sector (civilian drone detection), whose main companies are
still being created, differentiating our service and stating its superiority are the best
strategies to follow. Owing to our competitors initial aggressive set up, we strongly feel
this is the best decision that could be made.
On the other hand, coupled with the previous idea, the image we would like to reach is
based on the values of our company. That is why we would like to be seen as an innovative
and security reliable company. Likewise, SDS radar would be indirectly associated with such
values.
Thereby the catchword chosen to initially advertise SDS is:

Pursuing perfection in drone detection


To execute our plans SDS will mainly rely on:

Website advertisement
o

Assistance to technological and security fairs


o

In our own website and in specialised sites

This would allow us to have real feedback from companies or organizations and
even comprehend how our systems should be adapted to their needs

Entrepreneurial contests participation


o

If reaching winning positions, our desired image would be reinforced

Evidence of success

Generation of attractive audio-visual resources

69

Business Plan | [Sky Detection Security]

9. Future Developments
Although our radar system is initially expected to cover drone detection needs, further
applications can be exploited with little or no changes in the initial design. So, it is worth
stating which could be the next working lines of our company.
The 4 main working areas that our company could cover just with little adaptation of our
system are:

Bird strike prevention (airports)


o

This application would not require a huge change in our radar system as it is based on
the idea of detecting flying objects. In order to accomplish this purpose we will have to
redesign the processing system in order to distinguish biological frequencies and
technological ones, this will mean take into account the Doppler effect.

Example of system implementation


Source: www.accipiterradar.com

Detecting structural issues in buildings and bridges


o

Our radar has a really directive antenna which will cover one of the main needs to
detect mill metrical crashes in buildings and bridges.

Avalanche prevention in mountains


o

Snow (skiing stations)

Rocks (mines and mountain villages)

Example of system implementation


Source: Mine Pan-American- Exploration and movement radar

Tracing geological movements

Leaving apart the first mentioned use, it is worth focusing on the latter 3 ones as all of them
cover a potential need in any developed country, risk prevention.

70

Business Plan | [Sky Detection Security]

9.1 Risk Prevention through Radar Systems


Our radar offers the possibility to observe a certain media continuously. This allows us to
provide with information only sensitive to electromagnetic waves. But other applications
appear from the latter idea and one of them is information comparison and correlation.
On the basis that non-dynamic objects should behave equally independently of time, if little
changes happen the radar should be able to detect them. Such changes can be tiny
movements (~ mm) in a building or in a mountain that could lead to major disasters.
Hence, radar is a potential technology that can be used to prevent accidents and raise
awareness about dangerous zones. When it comes to saving lives, the market is always
opened as it is the duty of any organization to minimize the risks in its daily activities.
For example, when dealing with avalanches, there has been a notorious increase in fatality
rate in the recent times. Systems like ours could help to slow down the crescent tendency
that the next figure notes.

Source: National Avalanche Center (USA)

With the image presented above the existing necessity has been proved and thus, the
viability of this brand-new working line.

71

Business Plan | [Sky Detection Security]

10. The Organization Plan


SDS (Sky Detection Security) is going to be localized in Barcelona city, Spain. In its first
stages it is going to be a small researching company with 5 hired works, plus the director.
In the long run we would like to expand our business, both locally and globally. Growing in
size will mean growing in the availability of products offered. That is why we would highly
desire to give an opportunity to undergraduates who are seeking for their first steps in their
professional career, so that they can help creating new lines of work. This would be an
enriching experience that must not be associated with any sort of scholar abuses.
However, concerning the present lets start discussing the initial set up characteristics of
our company.

10.1 Legal Company Structure


Regarding the Spanish law that stablishes the different sorts of companies and societies
published in the Real Decreto Legislativo 1/2010, SDS is going to be a S.L.N.E (Sociedad
Limitada Nueva Empresa) or more commonly known as S.L or L.L.C (Limited Liability
Company).
Although the steps to create and register an entity of this kind, is far from being complex,
we have decided to leave it in charge of an administrative agent. The cost of hiring the
expert has been included in the financial plan and will be used to estimate the initial
investment required.
Apart from that, it should be remarked that the creation of the company will require
depositing its initial social capital in a new bank account. The law sets the minimal quantity
to be deposed is 30,00.06 . Once this step has been made, our agent will ask us to pay the
correspondent taxes, which are a 1% of the social capital previously set.
If desired to increase the capital, the transmission tax will have to be paid.
After a month or so, our company will be successfully registered and will own its unique
identifier, the N.I.F (Fiscal Identifying Number).
Maintaining the company is going to cost about 1000 annually, plus 3000 associated
with accountability management.

72

Business Plan | [Sky Detection Security]

10.2 Organizational Company Structure


Due to the relative little size of the company will rely on the benefits that a vertical
structure offers. The company first organigram will be based on the next figure:

Figure: Initial SDS Organigram

As shown above, you can note that key roles for the proper development of the company
are missing. This fact is caused by the externalization of some services that our company
will not be able to afford during its first years. Those services will be carried out by external
companies:

Accountability

Advocacy of the company

Distribution and Logistics

Receptionist

73

Business Plan | [Sky Detection Security]

10.3 Location
As has been noted, the company is going to be divided in two, bearing in mind the two main
areas of work, both technical and administrative/marketing. That is why, the optimal
solution is renting an office and an industrial building, according to the necessities our
working teams require.

10.3.1 Office
The rented office is going to be located at Avenida Madrid in the block of block of
buildings La Maternitat i Sant Ramon. Its monthly cost is going to be about 600 .
The compound of offices already provides with a secretary, and what is more important, is
located in the financial heart of Barcelona.
The office has a total surface of 123 m2, though we are just going to use half of it as the
other half is expected to be shared with another company. The office will be mainly used by
the executive manager and the marketing agent, but engineers should have at their
disposal proper places to work on their designs.

In the initial investment we have already devoted an economical item to the purchase of
the office furniture and commonly used electronic devices.

74

Business Plan | [Sky Detection Security]

10.3.2 Workshop
As a researching and technical company we will require a special site to build our drone
detection system. In such place technicians and engineers should be able to execute their
jobs successfully. Due to that, we will rent a workroom in C/ Corts Catalanes, 690.
Its monthly fee amounts a total of 800 , plus all the further expenses that we will need to
cover when it comes to equipment, tools, measuring instruments and so on and so forth.
We are not going to buy some specialized equipment, such as network spectrum analyzer.
Given the punctual uses that we are going to make of certain devices it has been opted to
decide that we will rent them when needed.

75

Business Plan | [Sky Detection Security]

10.4 Distribution and Production


As it has been noted in past sections, distribution is going to be left in charge of associated
reselling companies. They may wish to add specific features in their security systems which
can lead to contract our services.
Note: see section 6 (Marketing Plan) to understand how this contacts are going to be established.

On the other hand, the production of the radar system is going to be carried out in our
workshop, specifically by our technicians with their respective supervision from engineers.
The available man force is expected to be able to build 50-60 radars a year if working
devotedly only to the building process. Nonetheless, maintenance will have to be executed
periodically, as well as repairs and certification which will be part of the daily working
scheme of our technicians. This provokes us to reduce the gross production rate up to 30
radars a year.
Engineers will investigate and design innovative detection systems in parallel. They will
support the technical team when needed, though they are not expected to join them
during long periods of time.

76

Business Plan | [Sky Detection Security]

11. The Financial Plan


In this section we are going to explain in detail the financial plan expectations of our enterprise within the first five years and how we expect our
company to proceed. All prices in this section are expressed in euros.
Our aim is to estimate the minimum capital that our company would need to start with.

11.1 Financial Terms


The shared capital of SDS company is 150,000, this amount is going to be reversed by all company partners equally distributed. Due to financial
studies results, we have been forced to ask for a loan from the bank. The requested loan is of 120,400 which will be returned with 5% interest in
within 60 months leading to a repay of 205,970.44.
This amounts leads us to a needed total capital of (150,000 + 120,400)= 332,400.
Now we come into detail of our company's financial results.

77

Business Plan | [Sky Detection Security]

11.1.1 Salaries
There are four different types of employees defined in our company. Each type of employee has its corresponding gross salary provided by the
company, but the company has to contribute a percentage of the salary of social security. This percentage of the salary is the 23.6%. The employees,
therefore, do not receive completely this gross salary. Furthermore, every employee has to pay monthly their own contribution to the social
security, that is a percentage of 4.7% of the salary. In the following table we can find in detail the corresponding salaries of each type of employee
and his social security contribution.
Salaries

Executive Director
Engineers
Technicians
Marketing sponsor

Total Salaries

Gross
Salary
(/month)
7,000
5,000
2,000
3,000

Gross
Salary
(/year)
84,000
60,000
24,000
36,000

Social
Security*
(23.6 %)
19,824
8,496
5,664
8,496

Social
Security
(4.7 %)
3,948
2,820
1,128
1,692

Net Salary
(/month)
5019
3585
1434
2151

Net
Salary
(/year)
60,228
43,020
17,208
25,812
Total

Amount

1
2
3
1
7

Wages to pay by
the company
(/year)
64,176
91,680
55,008
27,504
238,368

Social
Security
(/year)
19,824
16,992
16,992
8,496
62,304

300,672

78

Business Plan | [Sky Detection Security]

11.1.2 Direct Costs


Direct costs are those prices that can be completely attributed to the production of specific goods or services. Direct costs refer to materials, labour
and expenses related to the production of our service.
We have considered from one side material costs which are the costs of the raw materials and components used to create each radar; and from the
other side we have labour costs and direct expenses which are the cost of the work done by all workers who actually make the product on the
production line and expenses that varies directly with changes in the volume of a cost object.
Here we have a brief list of where our radar's materials costs come from:
Structure
Power Supply
Structure body
Boxes

510
150
300
60

Processing Team
PC
Controllers (x2)
ADC

550
200
300
50

Signal Generation
Ardruino micro
Microchips
Cables
Radar Plate

100
15
40
20
25

Conditioning
Filters and Amplifiers
Front end
Mixer
Amplifier
Cables
Attenuator
Voltage Regulator
Circulator
PCB

Motor
Limit switches(x4)
Stepper Motor (x2)

386
13
20
14
18
2
300
19

Antenna
Parabolic antenna
Pyramidal horn
Conectors
3D Printing

5
5

125
30
25
40
30

500
200
300

79

Business Plan | [Sky Detection Security]

Direct Cost (/Radar)


Direct Cost (/Radar Multilayer)
Direct Labours + Direct Expenses

2176
2576
8750

In our case; direct labours and expenses costs refer to the employees that are in charge of transportation and system installation; as we have
considered the other salaries as indirect costs.
This leads us to the following average costs per unit:

Service 1 (Radar without multilayer System): 10,926


Service 2 (Radar with multilayer System): 11,326

The selling price of this services leads us to a gross margin of 16% and 24% respectively. The reason of this gross margin difference in between
products is that our company offers twice more services from RadarSDS with multilayer than the simple one.

82

Business Plan | [Sky Detection Security]

11.2 Model Inputs


FORECASTED REVENUE
Units sold
annually

Average
price per unit

Annual revenue
per product

Service 1 (Radar + Alarm System)

10

13,000

130,000

Service 2 (Radar+Multilayer+Alarm System)

20

15,000

300,000

TOTAL OF FORECASTED REVENUE

430,000

COST OF GOODS SOLD


Expected
gross margin

Average cost
per unit

Annual cost of
goods sold

Service 1 (Radar + Alarm System)

16%

10,926

109,260

Service 2 (Radar+Multilayer+Alarm System)

24%

11,326

226,520

TOTAL COST OF GOODS SOLD

335,780

83

Business Plan | [Sky Detection Security]

ANNUAL MAINTENANCE, REPAIR AND OVERHAUL


Factor (%) on capital equipment

15%

ASSET DEPRECIATION
Number of Years

TAX
Annual Tax Rate

25%

INFLATION
Annual Inflation Rate

2%

EXPECTED SERVICE DEMAND INCREASE


Annual Increase

5%

FUNDING
Loan Amount
Annual interest rate

182,400.00
5.00%

Term of loan (months)

60

Monthly rate

0.41%

Payment

TOTAL AMOUNT PAYABLE

3,432.84
205,970.44

In the table above, there is the loan debt detailed as we have explained before. Our company has been realistic about the annual increase of sales as
we have only considered a 5%, in reality this may be higher as we will invert a considerable amount of continued advertising based on our trademark.
The reason we considered reasonable to have a 5% increase is because sales may increase each year but it is very important to have in mind that
clients may drop the service at some point.

84

Business Plan | [Sky Detection Security]

11.3 Profit & Loss Account


Here is the financial statement that summarizes the revenues, costs and expenses incurred during the first five years.

PROFIT AND LOSS ASSUMPTION


Year 1

Year 2

Year 3

Year 4

Year 5

0.00%

5.00%

10.00%

15.00%

20.00%

Expected demand Service 1 (units)

10

11

11

12

12

Expected demand Service 2 (units)

20

21

22

23

24

0.00%

2.00%

4.00%

6.00%

8.00%

Expected cost per unit Service 1

2,176.00

2,219.52

2,263.04

2,306.56

2,350.08

Expected cost per unit Service 2

2,576.00

2,627.52

2,679.04

2,730.56

2,782.08

Annual cumulative demand (revenue) increase

Annual cumulative inflation (expense) increase

85

Business Plan | [Sky Detection Security]

INCOME
Revenue

Year 2

Year 3

Year 4

Year 5

Service 1 (Radar + Alarm System)

130,000.00

136,500.00

143,325.00

150,491.25

158,015.81

Service 2 (Radar+Multilayer+Alarm System)

300,000.00

315,000.00

330,750.00

347,287.50

364,651.88

Accounts Receivable

107,500.00

112,875.00

118,518.75

124,444.69

130,666.92

Incomes cashed

322,500.00

338,625.00

355,556.25

373,334.06

392,000.77

430,000.00

451,500.00

474,075.00

497,778.75

522,667.69

Year 1

Year 2

Year 3

Year 4

Year 5

Service 1 (Radar + Alarm System)

21,760.00

23,304.96

24,950.02

26,701.32

28,565.37

Service 2 (Radar+Multilayer+Alarm System)

51,520.00

55,177.92

59,072.83

63,219.29

67,632.71

Accounts Payable

24,426.67

26,160.96

28,007.62

29,973.54

32,066.03

Outcomes cashed

48,853.33

52,321.92

56,015.23

59,947.07

64,132.05

Cost of goods sold

73,280.00

78,482.88

84,022.85

89,920.61

96,198.08

TOTAL INCOME

356,720.00

373,017.12

390,052.15

407,858.14

426,469.61

TOTAL REVENUE
Cost of Sales

Year 1

Accounts Receivable : Services that our company has offered but they still need to be cashed. It refers to clients debts.
Incomes Cashed: All sales that have been charged.
Accounts Payable: Costs that our company have not payed yet. Our debt.
Outcomes Cashed: Costs that have been already covered.

86

Business Plan | [Sky Detection Security]

EXPENSES
Operating expenses

Year 1

Year 2

Year 3

Year 4

Year 5

R&D

5,000.00

5,000.00

5,000.00

7,295.57

12,448.50

Depreciation

7,320.00

7,410.00

7,500.00

7,590.00

7,680.00

Insurance

3,000.00

3,000.00

3,000.00

3,000.00

3,000.00

Marketing

9,000.00

9,000.00

9,000.00

9,000.00

9,000.00

Website support

1,500.00

500.00

500.00

500.00

500.00

Distribution costs

5,000.00

5,000.00

5,000.00

5,000.00

5,000.00

Rent

19,200.00

19,200.00

19,200.00

19,200.00

19,200.00

Business plan development

10,000.00

Maintenance

10,000.00

10,000.00

10,000.00

10,000.00

10,000.00

Salaries

300,672.00

300,672.00

300,672.00

300,672.00

300,672.00

Interest expense on long-term debt

8,184.28

6,533.79

4,800.78

2,981.11

1,070.47

Other

1,000.00

1,020.00

1,060.80

1,124.45

1,214.40

379,876.28

367,335.79

365,733.58

366,363.13

369,785.37

TOTAL EXPENSES

87

Business Plan | [Sky Detection Security]

Our company is based on technological services so we need to invest a considerable amount of money in R&D.
During the first three years we can only invest 5,000 plus part of the engineer's salary which will also be invested in it as they are in charge of
research and development. From the third year those investments keep increasing as our company, from the moment we have profit we will post
30% of our benefits in that sector.

Year 1

Year 2

Year 3

Year 4

Year 5

TOTAL INCOME

356,720.00

373,017.12

390,052.15

407,858.14

426,469.61

TOTAL EXPENSES

379,876.28

367,335.79

365,733.58

366,363.13

369,785.37

-23,156.28

5,681.33

24,318.57

41,495.01

56,684.23

Income Tax

426.10

1,823.89

8,539.66

14,171.06

TOTAL TAXES

426.10

1,823.89

8,539.66

14,171.06

- 23,156.28

5,255.23

22,494.68

32,955.35

42,513.17

PROFIT BEFORE TAX


TOTAL GROSS PROFIT
TAXES

NET PROFIT
TOTAL NET PROFIT

As we can expect our company has losses the first year, but then net profit increases year by year.

88

Business Plan | [Sky Detection Security]

11.3.1 Taxes
The reform of the Corporation Tax Act , with effect from 01.01.2015 , states that companies may offset tax losses without time limit (until 2014 the
compensation was within a maximum of 18 years). Moreover, the right to check these negative basis by the Administration barred after 10 years and
once that deadline passed , the Administration should accept the compensation if the taxpayer proves the existence and amount of the same with
the reverse and the deposited accounting in the Companies Register.
Another thing to bear in mind is that in addition to not set any time limit for compensation, the Law provides for tax periods beginning on or after
January 1st, 2016 , limiting the amount of tax losses from previous years to offset 70% of pre-tax basis, admitted in any case to compensation
amounting to 1 million euros. This limit of taxable income is calculated after taking into consideration the tax base of businesses prior to the
implementation of the new reserve adjustments capitalization.
Here we have a table showing how our enterprise applies taxes taking advantage of the new established law.

Result Before Tax


Taxable
Tax Compensation (limit
70%)
FINAL TAXABLE
Tax payable (25%)
Tax Loss (credit)
Real tax rate

Year 1
-28,336.28

28,336.28

Year 2
5,681.33
5,681.33

Year 3
24,318.57
24,318.57

Year 4
41,495.01
41,495.01

3,976.93

17,023.00

7,336.36

1,704.40
426.10
24,359.36
0.08

7,295.57
1,823.89
7,336.36
0.08

34,158.65
8,539.66
0.00
0.21

Year 5
56,684.23
56,684.23

56,684.23
14,171.06
0.00
0.25

89

Business Plan | [Sky Detection Security]

11.4 Balance Sheet


ASSETS
Current Assets

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

95,480.58

69,344.80

58,649.08

56,521.44

61,961.25

107,500.00

112,875.00

118,518.75

124,444.69

130,666.92

Cash and short-term investments


Account Receivable
TOTAL CURRENT ASSET

227,400.00

202,980.58

182,219.80

177,167.83

180,966.12

192,628.17

Property and Equipment

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

Machinery and equipment

105,000.00

Industrial Property (patented prototype design)

90,000.00

90,000.00

90,000.00

90,000.00

90,000.00

90,000.00

4,500.00

9,000.00

13,500.00

18,000.00

22,500.00

4,000.00

4,500.00

5,000.00

5,500.00

6,000.00

720.00

1,530.00

2,430.00

3,420.00

4,500.00

Less Accumulated depreciation expense (5%)


Office material/Furniture

4,000.00

Less Accumulated depreciation expense (20%)

4,500.00

- Accumulated material depreciation (9%)


Computers

5,000.00

Less Accumulated depreciation expense (20%)

5,000.00

5,000.00

5,000.00

5,000.00

5,000.00

900.00

1,800.00

2,700.00

3,600.00

4,500.00

6,000.00

6,000.00

6,000.00

6,000.00

6,000.00

1,200.00

2,400.00

3,600.00

4,800.00

6,000.00

97,680.00

90,770.00

83,770.00

76,680.00

69,500.00

- Accumulated computers depreciation (9%)


6,000.00

Software

Less Accumulated depreciation expense (20%)


Total Property and Equipment

TOTAL ASSETS

105,000.00

332,400.00

300,660.58 272,989.80

260,937.83

257,646.12

262,128.17

90

Business Plan | [Sky Detection Security]

LIABILITIES
Debt

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

182,400.00

149,390.20

114,729.90

78,336.60

40,123.62

Account Payable

24,426.67

26,160.96

28,007.62

29,973.54

32,066.03

TOTAL LIABILITIES

173,816.86

140,890.86

106,344.21

70,097.16

32,066.03

Initial balance

Year 1

Year 2

Year 3

Year 4

Year 5

150,000.00

150,000.00

150,000.00

150,000.00

150,000.00

150,000.00

5,255.23

22,494.68

32,955.35

42,513.17

4,593.62

37,548.97

Long-term debt/loan

EQUITY
Owner's equity (common)

Profit for the year

23,156.28
-

Retained earnings

TOTAL EQUITY

TOTAL LIABILITIES AND EQUITY

23,156.28

17,901.06

150,000.00

126,843.72

132,098.94

154,593.62

187,548.97

230,062.14

332,400.00

300,660.58

272,989.80

260,937.83

257,646.12

262,128.17

The balance sheet presents a company's financial position at the end of each year. When it comes to valuing property and equipment we have
considered the patent and prototype design to have a virtual time life of 20 years which leads us to a depreciation of 5% each year. When it comes to
office material, computers and software license we have applied a virtual time life of 5 years, adding to furniture an PC's a 10% of material
depreciation for use and wear.

91

Business Plan | [Sky Detection Security]

11.5 Cash Flow


Operating activities

Year 1

Year 2

Year 3

Year 4

Year 5

Incomes

356,720.00

373,017.12

390,052.15

407,858.14

426,469.61

Less operating expenses ( NO including interest)

379,876.28

367,335.79

365,733.58

366,363.13

369,785.37

+Interest

8,184.28

6,533.79

4,800.78

2,981.11

1,070.47

+ Depreciation

7,320.00

7,410.00

7,500.00

7,590.00

7,680.00

107,500.00

112,875.00

118,518.75

124,444.69

Variation Clients debts


-Clients debts

107,500.00

Variation Costs debts

Taxation
Purchase of assets

118,518.75

124,444.69

130,666.92

24,426.67

26,160.96

28,007.62

29,973.54

90,725.33
8,184.28

Interest expense
Cashflow before tax

112,875.00

24,426.67

-Account Payable
Cashflow before taxation and interest

98,909.62
-

105,000.00

26,160.96

28,007.62

29,973.54

32,066.03

15,984.41

32,822.26

48,106.11

61,304.96

6,533.79

4,800.78

2,981.11

1,070.47

9,450.62

28,021.48

45,124.99

60,234.49

426.10

1,823.89

8,539.66

14,171.06

500.00

500.00

500.00

500.00

Share capital

150,000.00

Loan drawdown

182,400.00

Repayment of debt

33,009.80

34,660.29

36,393.31

38,212.97

40,123.62

CASH FLOW PROJECTION

236,919.42

-26,135.77

-10,695.72

-2,127.64

5,439.81

BEGINING CASH BALANCE

332,400.00

95,480.58

69,344.80

58,649.08

56,521.44

ENDING CASH BALANCE

95,480.58

69,344.80

58,649.08

56,521.44

61,961.25

92

Business Plan | [Sky Detection Security]

11.6 Conclusions
10.6.1 NPV
The Net Present Value (NPV) is defined as the sum of the present values of incoming and
outgoing cash flows over a period of time. Incoming and outgoing cash flows can also be
described as benefit and cost cash flows, respectively.
,
:
:


! "

1
#:
: $

! "

To understand how NPV should be analysed we have attached the next table in order to
achieve a better comprehension among the readers:
NPV > 0

The investment would add value to the firm

NPV = 0

The investment would subtract value from the firm

NPV < 0

The investment would neither gain nor lose value for the firm

As for SDS, we would obtain a NPV of 299543,3 which states a positive financial situation.

92

Business Plan | [Sky Detection Security]

11.6.2 IRR
Internal Rate of Return is the discount rate at which the net present value of an investment
becomes zero. In other words, IRR is the discount rate which equates the present value of
the future cash flows of an investment with the initial investment. (NPV = 0)
& '%
:

%(

! '%(

Or in other words:

1
:
:


! "

'

#:
' : '%


% !

! "
%

A project is mostly accepted if its IRR is NOT less than the target internal rate of return. In
our case:
''
'%

% !

0,611

% 5% - 61,1%

We obtain a fairly IIR value. A definitive proof of our business feasibility and profitability.

11.6.3 EBITDA
(Earnings before interest, taxes, depreciation and amortization)
EBITDA is an indicator of a company's financial performance which is calculated in the
following manner:
./'#$0
3456 : 1!

( %

& .1

%7 1, %

%
,

% %

EBITDA is essentially net income with interest, taxes, depreciation, and amortization added
back to it, and can be used to analyse and compare profitability between companies and
industries because it eliminates the effects of financing and accounting decisions.
SDS would obtain an EBITDA of 7,652.

93

Business Plan | [Sky Detection Security]

11.6.4 Graphs
To conclude we would like to present some graphs with the most important data regarding
our financial plan.

Demand of Services
30
25

Units

20
15

Expected demand Service 1


(units)

10

Expected demand Service 2


(units)

5
0
1

Years

As we can see in the reported graphic, sales increase each year, this is due to the 5%
increase of demand. The results show the total services the company has available at that
time, considering the ones we still have from the previous years and the new ones; we also
include possible churns.

93

Business Plan | [Sky Detection Security]

On the other hand it may be interesting taking a quick glance at Cash Flow evolution. With
all the data collected in the Cash Flows of the first five year simulations we can put together
the beginning and the ending cash balance of each year and implement the following
graphic.

Cash Flow
350,000.00
300,000.00

Cash []

250,000.00
200,000.00
Beginning Cash Balance

150,000.00

Ending Cash Balance

100,000.00
50,000.00
1

Years

In this graphic, the point where the beginning and ending cash balance cross is where the
total cash flow of the enterprise will start to be positive and from that point our cash
benefits are going to be positive. This graphic shows how that point will occur from the
fourth year.

94

Business Plan | [Sky Detection Security]

Last but not least, lets plot the Net Profit evolution:

Net Profit
50,000.00
40,000.00

Net Profit []

30,000.00
20,000.00
10,000.00
1

-10,000.00
-20,000.00
-30,000.00

Years

From the net profit graphic we can calculate the breakeven point which is where our
business has reached a zero balance; when our income covers our expenses exactly. This
point happens approximately in the year 2 of our enterprise, from where we start having
profits and not loses. In order to break even our company has to offer approximately 21
services of radar multilayer and 11 services of simple radar, which sum up around 32 radar
services that lead us to an income of around 451,500 euros on sales.

95

Business Plan | [Sky Detection Security]

12. Exit Strategy


Entrepreneurs like us live for the struggle of launching their businesses. But one thing they
often forget is that decisions made on day one can have huge implications down the road.
It is not enough to build a business worth a fortune; we have to make sure we have an exit
strategy, a way to get the money back out.
Why would we plan an exit strategy when we are about to start running a business we
really believe in?
Well, we live in a constant changing world and there are many external factors our business
depends on, so it is very important to have in mind what problems could appear and how
would we solve them.

Unexpected offers may arise


o As the ecommerce industry becomes more competitive and larger players
look for growth through acquisitions, smaller companies may look for
mergers to gain a larger market share and buying power.

Health or family crisis


o Sudden illnesses or family issues take time away from your focus on your
business.

Economic shift
o A recession may negatively impact your business.

Technology trends shift


o If you are not making the transition to mobile devices, you may be left in the
dust.

You want options


o Should you decide to sell, you will want to have options beyond selling to a
competitor at a low value.

Age
o

At some point, you may want to retire and you will want to capture the
value of your company.

Product trends change


o Many small ecommerce businesses are highly dependent on a single
product or product line. A shift in trends may lower your revenues.

Wear and tear


o In my case, I simply grew tired of the sameness of managing a mid-sized
ecommerce company. I wanted to do something different and reap some of
the benefits of my hard work.

96

Business Plan | [Sky Detection Security]

To focus all this possible future problems we have considers three exit strategies in case
the one in mind does not work. We would rethink the situation and focus on the one we
think mostly fits with our problem in case problems surround our company in the future.

12.1 PLAN A: The Modified Nike Manoeuvre: Just


Take It.
One favourite exit strategy of some forward-thinking business owners is simply to bleed the
company dry on a daily basis. This does not mean run it in the red--It means pay yourself a
huge salary, reward yourself with a gigantic bonus regardless of actual company
performance, and issue a special class of shares that only you own that gives you ten times
the dividends the other shareholders receive. Although we frown upon these practices in
public companies, in private companies, this actually isn't such a bad idea. It's called a
"lifestyle company".
Rather than reinvesting money in growing our business, in lifestyle companies, you keep
things small, take out a comfortable chunk, and simply live on the income. Money in the
wallet is no longer money in the business. If you're in a business that must invest to grow,
taking out too much money can hurt you down the road. Also, if you have other investors,
taking too much can upset them. Imagine their surprise when investors see that the
business owner was pulling out bucks by paying his family exorbitant interest on loans
while investor loans were repaid at rock-bottom rates over as long a time period as
possible.
If you think you're in business for the lifestyle, minimize your dependence on other
investors and structure the business to allow you to draw out cash as needed.
Pros
There's no need to think hard about
getting out: Just pull out the money
when you need it.

Who doesn't like seven figures of takehome pay?

Cons
The way you pull the money out may
have negative tax implications. For
example, a high salary is taxed as
ordinary income, while an acquisition
could bring money in the form of capital
gains.
Without careful long-term planning, you
may end up pulling out money now you'll
need later

97

Business Plan | [Sky Detection Security]

12.2 PLAN B: Selling to a Friendly Buyer


A Friendly buyer can be a manager or a worker of the company who has transmitted you
enough confidence and power to be able to keep up the company you have created;
personal relations may blind negative capabilities that those people have to be relied the
company so you have to be careful with that.
Another possible buyer may be other companies you have been allied to, of course if they
have their own company in that sector that means they are more than capable of running
the business and they have knowledge of the market risks and opportunities.
The purest friendly buyout occurs when the business is passed down to the family. But
remember, the key to "family business" is the word "family." Is yours functional? No sooner
than the family business is leaved to the kids, it's likely they'll end up fighting over who got
the larger share, who does or doesn't deserve the ownership they got, and who gets the
final word. They'll finger-point for a decade while the business slowly declines into ruin,
then blame you for not leaving clearer instructions. If you decide to go this route, you've
got a lot of planning to do before getting out.
Pros
You know them. They know you.
There's less due diligence required.
Your buyer will most likely preserve
what's important to you about the
business.
If management buys the business, they
have a commitment to making it work.

Cons
You can get so attached to being bought
by someone nice that you leave too much
money on the table
If you sell to a friend, they'll be peeved
when they discover they just bought the
liability for that decade's worth of taxes
you forgot to pay
Selling to family can tear the company
apart with jealousies and promotions that
put emotion way ahead of business needs.

Selling to family makes good on that


regrettable offhand promise made 30
years ago, "Someday, son/daughter, all
this will be yours."

98

Business Plan | [Sky Detection Security]

12.3 PLAN C: The Liquidation


Even lifestyle entrepreneurs can decide that enough is enough. One often-overlooked exit
strategy is simply to call it quits, close the business doors, and call it a day. I don't know
anyone who's founded a business planning to liquidate it someday, but it happens all the
time. If you liquidate, however, any proceeds from the assets must be used to repay
creditors. The remainder gets divided among the shareholders-if there are other
shareholders, you want to make sure they get their due.
Pros
It's easy and it's natural. Everything
comes to an end.
There is no negotiations involved.

There's no worrying about transfer of


control.

Cons
Get real; it's a waste! At most, you get the
market value of your company's assets
Things like client lists, your reputation, and
your business relationships may be very
valuable, and liquidation just destroys them
without an opportunity to recover their
value.
Other shareholders may be less than
thrilled at how much you're leaving on the
table

99