1.0 Executive Summary

The proposed company will be a standardized and licensed gold mining company which will be based in Dhabi, United Arab Emirates (UAE). It will be under Dubai Multi Commodities Center (DMCC). Our business aim as a gold trading company is to become one of the leading jewellery making companies that utilize gold not only in UAE, but across the globe. As a trading company, we are more than willing to invest in owing environmentally friendly gold and equally hire competent and highly skilled personnel. We have been in a better position to obtain necessary permits as well as licenses from all the relevant government departments both at the municipality and state level at the UAE. This firm is set to provide a new look into how the gold mining/trading business is to be run globally. Therefore, there will be an urgent need to train the workers and top-management of the company. Arguably, the demand for gold is not going to drop at any given time, that the reason as to why they’re in need to put in place effective plans to evaluate all the available market in regions such as Asia, Europe and the United States of America (Singogo, Kaulihowa & Grynberg, 2018). To reach these regions, it is essential to establish a broader range of distribution supply chain across these region and other nations across the globe. The trading company will look at all-time showcase her commitment to ensuring sustainability both individually and as an established corporate, through actively participating in effective business practices. We shall ensure that all our employees are trustworthy and countable to the highest demands through meeting our clients need appropriately. The DMCC is a limited company which will be owned partly by the government and other interested investors.

1.1 Products and Services

As noted from the above discussion, the company is formed with the objective of maximizing the revenue in gold industry. Primarily, the core revenue for the business will come for direct sale of gold items as well as gold on a daily basis. The firm, through its enhanced partnership with various brokers, will be in a better position to increase its returns via the adoption of leverage on the object bought using the company’s capital. The business projects that will incorporate e approximately 1.5% leverage on all its gold trade. The firm’s secondary source of revenue will be obtained from the interest accrued on initial capital held from the short sales which are used together with the firm trading operations. Notably, the interest revenue will produce about 25% of the Gold Trading Company’s overall revenue. Most importantly, the company will comply with all the relevant regulations in Angola, bearing in mind the fact that the country is our primary source of gold. Moreover, the company will comply with all the applicable state, federal as well as local regulations within Asia, Europe and the United States. We will always burn the midnight oil to make sure that the company is not only accepted in UAE but across other nations in the world, in which we intend to supply our items.

1.2 Financing Options

            At this point, the trading firm is pursuing to raise $4,000,000 to aid in the development of Gold Trading business operations. The company’s founder-Sheikh Mohammad is pursuing to sell an 80% ownership interest in the business in favour of this capital. It is important to note that 85% of the initial capital will be part of direct investments into the company’s trading options. In a nutshell, the proposed capital will serve the following function, which includes but not limited to gold item trading operations, coming up with the company’s profile and working capital among other features.

1.3 Mission Statement

Over the last decades, the attractiveness of gold as a store for wealth has raised: as the demand for this valuable item increase, we seek to provide mined and smelted gold to meets the ever-rising clients’ requirements. In this light, the firm’s mission is to develop DMCC into a middle-market investment firm which focuses on trading gold items with the intention of realizing few, but constant revenues daily accrued from sales of the products (PR Newswire Association LLC, 2018).

1.4 Top Management

The firm will be headed by Sheikh Mohammed, who has vast experience in the item trading in the industry. With his experience, it is no doubt he will ensure that the business operations are profitable within the first few years of services.

1.5 Projections on Sales

            We project a steading growth rate of the sales at the beginning of operations. The following is the projection for the coming three years of operations:

Year
1
2
3

Total Sales
$650,280
$713,566
$775,650

Operational Costs
$375,435
$381,776
$421,688

EBITDA
$211,325
$261,173
$271,921

Interests rates, depreciation as well as taxations
$95,649
$107,811
$116,761

Overall Net Profit
$111,586
$147,167
$165,133

Table 1: shows the sales estimations and profits accrued from the business operations in the next three years

1.6 Expansion Projection

Notably, the firm will undergo vigorous expansion immediately after getting the required capital; given that the policies which regulate the investment options for gold item trading are distinct from the one for general dealers. The good thing is that the company will be in a position to obtain funds (capital) from the general public the same way as those of registered investment advisory. Currently, the founders and other interested partners are in the process of examining the terms and conditions of Angolan gold producers.

2.0 Firm and Financial Status Summary

2.1 Projections on Funds

The company (DMCC) needs $4,000,000 of equity funds. The following is a breakdown of how the funds will be used:

Estimated Start-Up Costs

Opening lease payments as well as deposits
$35,000

FF & E
$75,000

Working Capital
$30,000

Leasehold enhancements
$15,000

Deposits on Security
$3,000

Initial Supplies
$8,000

Firms Motor vehicles and leasing deposits
$15,000

Costs of Marketing
$12,000

Miscellaneous Costs
$8,000

Total Estimates of Start-up Costs
$201,000

Table 2: shows the start-up cost estimates

2.2 Management and Investor Equity

As noted before in the above discussion, the founder (Mohammad) is planning to sell approximately 80% interest in the trading firm in a bid to obtain the required capital for the business.

2.3 Exit Strategy

At one point in time, the management may decide to opt-out of the business; therefore, there is need to put in place effective exit strategies. As for such, the first strategy would be to sell out the whole company to a relatively established corporate at a reasonable premium. This because the gold trading business maintains a relatively fewer risks profile once the business is stabilized. Exit strategy, the management would sell the company at more than 10 or 15 times of their overall earnings.

3.0 Strategies and Market Analysis

3.1 Economic Analysis

Arguably, Asian countries such as India has remained the world largest market for gold according to the research and analysis were done in the previous year, although the demand has reduced to approximately 7% -that translates to about 930tonnes. Lasrado (2017), noted that gold objects accounted for the biggest share of the purchase at approximately more than 500 tonnes. Furthermore, the investment purchases were about 360 tonnes in India-this translates to about a quarter of the total world’s demands. Assessing the economy of the US concerning the demand for gold items/objects, we note that over the last couple of years the country suffered from the recession. Nonetheless, the demand for gold is one the rise just like in other countries such as China among others. According to Lasrado, (2017), recession adversely affects a country’s economy; given that the inflation rates affect the purchasing power of not only gold consumers but also consumers in general. Besides, the exchange rate does affect the pricings of the gold commodities, the potential risk as a result of adjustments in exchange rates are a reduction in revenue/sales. Majority of firms and established business have risked their growth as the values of Euro, Yuan and Yen increased significantly concerning the American dollar.

3.2 Industry Analysis

The gold trading business is a 3 billion dollar per annum business in the United States. There are approximately more than 200 domestic service providers of gold mining activities which work in more than 20 states. Essentially, the US gold industry employs more than 10,000 individuals and offers annualized payrolls amounting to more than $600,000,000. The decrease in inflation rates has necessitated this growth rate. The prices of gold commodities have improved significantly given that the majority of investors have opted to store their wealth in the form of the commodities amidst the falling value of the dollar. Also, the huge wealth of developing countries has increased the price per ounce to approximately $800. This increased demand is projected to increase even in the wake of inflation rates. Research and studies have shown that China is the leading consumer of gold as of 2018, followed closely by India and lastly the United States of America. Interestingly, in Asia, the prices of gold have increased considerably, prompting consumers to go for silver commodities. As examined by Lasrado, (2017), in Asian Countries, the demand for gold has remained subdues given that domestic prices have risen, monitoring gain in the overseas industry as well as weaker currency. Most importantly, gold future reached a record of as high as about 38,600 Indian rupees per grams. This means that the majority of consumers are purchasing the gold commodities in small quantities as a result of the price increase.

3.3 Clients’ Profile

Given that the gold trading firm intends to function via free trade markets within the United States of America and globally, it would be impossible to have direct clients. Arguably, the majority of the clients of the company are interested investors because the firm is trying its best to create wealth and revenues for them and the top management. Nonetheless, in the coming years, the firm will have to expand its operations by obtaining additional investments from the public. In this case, the trading company will have to register as a CTA company which deals with objects/pieces of jewellery as well as Trading Commissions. Several provision and regulations guide the investment options when it comes to commodities/jewellery trading; therefore it would be important for the top management to undertake competitive analysis of the different requirements in a bid to meet the stipulated regulations.

3.4 Competitive Analysis

The gold industry is characterized by immense competition ranging from bullion dealers and trading companies. On this note, analysis of the various dealers and companies will greatly assist the trading company which is planning to enter into the gold business. It is important to note that the United Arab Emirates dealers are classified by individual emirate as well as services provided, which implies individuals have an opportunity to cross-check their interested companies and rating scores. The gold trading business far and large dominated by Emirates Gold, Al Etihad Gold, Gold Standard DMCC and IGR Precious Metals, among others.

Name of dealer/Company
Percentage of market  share

Emirates Gold
18.0%

Al Etihad Gold
8.0%

Gold Standard DMCC
12.9%

IGR Precious Metals
30.5%

Regal Assets Dubai
30.5%

Table 3: shows the per cent market share for the various gold dealers/companies in the UAE

4.0 Marketing Plan

4.1 Marketing Techniques

Essentially, one of the marketing aims is to inform the different countries in Asia, Europe as well as the United States of America of the refined products offered by the company. To achieve this objective, this trading company will have to enhance the existing prime breakage relationships with the readily available brokers throughout all the targeted continents. This implies will significantly reduce the cost of advertisements which is a marketing tool anyway. Consequently, the company will develop a useful website which will be quite informative: this will enable the interested investors to check on the products offered by the company. This particular website will comprise features such as log in the menu, which will enable the user to check on the overall performance of the business altogether. Additionally, the trading company will recruit internet marketing experts who will monitor the various products placed on the website.

5.0 Pricing and Financial Analysis (Plan)

The significant assumptions when it comes to financial analysis and pricing is that:

The annual revenue of the company will grow continuously at a standard rate.
The company has acquired $4,000,000 of equity funds to kick-off the operations.
Interest rates will be earned in accordance with the investment options available.
The contract between the gold trading company and the Angolan gold producers has been signed.
The reference price per pound of gold will be $38,000.
The business commodities/products will purely rely on Angola products.

5.1 Financial Model and Crucial analysis

Kindly See attached excel spreadsheet:

Bibliography

Lasrado, F., 2017. Perceived benefits of national quality awards: A study of UAE’s award

 winning organizations. Measuring Business Excellence, 21(1), pp.50-64.

PR Newswire Association LLC, 2018. DMCC Claims Global Free Zone Award for Record

Fourth Consecutive Year. Available at https://www.prnewswire.com/news-releases/dmcc-claims-global-free-zone-award-for-record-fourth-consecutive-year-898229060.html. Accessed [8th November, 2019]

Singogo, F., Kaulihowa, T. & Grynberg, R. 2018. Gold Jewellery Demand and Gold Price

 Volatility: A Global Perspective. Journal of Economics, Management and Trade

21(10): 1-13, 2